Hospitality industry experts project U.S. hotel occupancy will fall short of 40% of their pre-COVID-19 numbers and bounce back a bit in 2021 to 52%, findings presented at STR’s Hotel Data Conference determined.
Demand for lodging may return to 2019 levels late in 2023, Northstar Meetings Group reported, but it will take at least another year for revenue per available room (RevPAR) or average daily rates to rebound.
"We thought we'd be able to start opening back up and we would see some more small meetings and corporate travel happening at the end of the third quarter, the start of the fourth quarter this year," STR president Amanda Hite said in a forecast analysis at the conference, Northstar reported. "And that's not what we are anticipating now."
The lower projections were evidenced by the conference itself, which was intended to be a hybrid in-person/virtual event in Nashville. Travel and gathering restrictions forced STR to cancel those plans and turn it into an online-only conference.
A 39.7% year-over-year drop in occupancy for 2020 was projected by STR and Tourism Economics. The average daily rate is expected to drop by 20.9%, which leads to RevPAR free-falling by 52.3%.
The June forecast was slightly more optimistic, the report found. Occupancy growth of 30.5% is expected in 2021 compared to this year. The average daily rate will get a slight increase of approximately 5.6%, and RevPAR’s 37.9% projected increase remains short of making up the big drop in 2020.
"We had anticipated that demand recovery in the third and fourth quarters of this year would be better than what it will be," Hite said, Northstar Meetings Group reported.
The average daily rate forecast for 2020 is $103.71, which is $27.42 less than in 2019, the report found. It is projected to regain $5.85 in 2021. RevPAR will drop by more than $45 this year compared to last year’s $86.64. The $56.95 expected in 2021 is far short of 2019 levels.
Hite said that leisure travel has begun to recover, according to the data, but it might not continue after Labor Day.
"We can't just survive on domestic leisure business forever," she said. "We've got to have business travel back and then group meetings — we've got to get group meetings back. But that won't be until next year.”
Another wave of coronavirus infection would push the recovery to 2023 or later.
“On the upside, if there's a vaccine, it could happen sooner," Hite told Northstar Meetings Group.
Group business is up 30% for Host Hotels & Resorts, Sourav Ghosh, the company’s executive vice president of strategy and analytics, said at the conference.
"We expect association business to come back first," Ghosh said. "Eventually followed by corporate group, I would say by the second half of next year, once there is a vaccine out there or a strong therapeutic."
The numbers show what happens when the economy gets shut down for two months, said Adam Sacks, president of Tourism Economics.
"The things that drove travel before this crisis are going to be very much in place on the other side of this crisis — the need to meet, the need to travel, the need to build new memories, to experience new things,” Sacks said, Northstar Meetings reported. “Those things are still going to be there at the end of this crisis. And so now we hang on and wait for that day."