Hotels Count on Road Trippers to Drive Visits


Source: The Wall Street Journal
By Dave Sebastian

August 26, 2020

Roadside inns are faring better than Ritz-Carltons as Americans start to travel again with loosened Covid-19 restrictions.

Though the pandemic has severely hurt the lodging industry overall, budget and midlevel hotels—the kind often found just off the highway—have taken a milder hit than many luxury hotels and resorts. Road trippers aren’t the only ones checking in: Midrange and budget hotels are also housing more essential workers on the go.

A key measure of hotel performance, revenue per available room, plunged 80.6% for the second quarter at luxury hotels in the U.S., after a 21.3% decline in the first quarter, according to data analytics firm STR, owned by CoStar Group Inc. Budget hotels, by contrast, saw a 44.4% decline in the second quarter, after falling 13.3% in the first quarter, STR data show.

Though big hotel chains have seen steep declines this year due to the pandemic, their lower-priced hotels have generally fared better. Marriott International Inc., MAR +4.72% which recorded its largest loss ever for the June quarter, posted a 75.6% decline in revenue per available room at its North American limited-service hotels, which include Courtyard and Residence Inn. That was slightly better than the 93.3% decline at its North American luxury hotels, which include JW Marriott, Ritz-Carlton and W Hotels.

The average daily rate at Marriott’s limited-service hotels in North America was $99.63, compared with $293.47 at luxury hotels. Much of Marriott, Hilton Worldwide Holdings Inc. HLT +2.35% and Hyatt Hotels Corp. H +3.37% ’s occupancy before the pandemic came from business and group travel, including at luxury hotels in big cities.

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