Half of hotel rooms expected to be empty in 2021

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For the US hospitality industry, 2021 is expected to be significantly better than 2020 but still significantly worse than 2019, according to STR’s latest forecast.

STR is the parent company of Hotel News Now and a division of the CoStar Group.

During the “Hotel Performance Outlook” session of the ALIS Winter Update online conference, STR President Amanda Hite said analysts at her company had downgraded their outlook for 2021 slightly, pushing occupancy projections below 50% for the year.

“It really points to the decline that we’ve seen in the last two months of the year,” she said, noting that a small spike in hotel demand in the summer months of 2020 happened. again faded in November and December.

“You saw a peak in the summer where everyone had this pent up yearning to get out and travel after being locked up for so long,” she said.

Hotel performance in 2021 should be defined by two halves. Hite said STR hopes to “see some acceleration” by mid-year if vaccine distribution progresses as planned.

“Certainly leisure travel… will be the driving force behind this,” she said. “But we expect a little more overhead on the group’s business which will continue through the fourth quarter of this year.”

Hite said the U.S. hotel industry is not expected to reach demand levels comparable to 2019 until 2023, and even then the average hotel daily rate and revenue per available room will still lag, according to current projections.

Hotel occupancy for the year is forecast at approximately 75.9% of 2019 levels; ADR is expected to reach 82.1% and RevPAR 60.7% of 2019 levels.

“We think that’s quite reasonable given that we don’t expect the rebound to start in any meaningful way until mid-year,” she said. “Certainly there are benefits as the virus grows more and more under control and more and more vaccinations occur. We therefore anticipate that we will see a new annual demand high in 2023.”

Hite said the course the pandemic has forced STR to consider metrics the company never thought this would be relevant to hotel industry forecasts, including the percentage of the US population that has received a COVID-19 vaccine.

As of January 20, only 4.3% of the population was vaccinated, she said.

“There’s still a long way to go to reach that 60% mark (the Centers for Disease Control and Prevention) is aiming for by June,” she said.

She said that in the last 10 months of 2020, the industry lost $83.9 billion in revenue, which is a much bigger hit than the fallout from the Great Recession, when around 16.9 billions of dollars were lost over a period of 19 months.


Former White House senior economic adviser Todd Buchholz said there was hope that traveler sentiment was improving.

During the “How Inauguration and the Pandemic Will Drive the Economy” session at the same conference, he said the economy in 2020 is best described as a cessation, rather than a recession or depression.

“In a typical recession or depression, the economy collapses because there has been excessive speculation or because there has been accumulated excess inventory like unsold cars or unsold homes, and that takes a some time for it to fall apart,” he said. “During a shutdown, and as a result of COVID, the economy shut down because people were told and decided for themselves ‘I’m not going out.’ I will not shop. I will not travel.’

Because of this key difference, he said the rebound could be relatively quick.

“It’s easier to bounce back from a cessation than a recession,” Buchholz said.

Recent surveys from the American Hotel & Lodging Association claimed that 56% of respondents were looking to get back on the road in 2021, which is “not far below typical averages,” he said.

“Can travel and leisure explode? That’s our question, and I think the answer is yes,” he said, noting that there is significant pent-up demand in the travel industry.

Buchholz said leaders and teams at the ownership level should prepare for a rebound.

“My best guess is that consumers have the wherewithal to fuel a strong recovery in travel and tourism,” he said, pointing to good credit and low levels of consumer debt.

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