STR, Tourism Economics Slightly Downgrade U.S. Hotel Forecast
STR and Tourism Economics slightly downgraded their latest U.S. hotel forecast due to performance declines…
STR and Tourism Economics slightly downgraded their latest U.S. hotel forecast due to performance declines posted in the last two months of 2020, STR president Amanda Hite said Monday during an Americas Lodging Investment Summit virtual conference. “The first half of the year will continue to be challenging for our industry,” she said.
Demand was down 35.7 percent year-over-year in 2020, Hite noted, but added that it peaked in summer and has been stable since August compared to 2019 week over week. “The good news is we have not seen further deterioration in the January performance numbers,” she said. “We are optimistic about the recovery, especially as we get to the middle of the year.”
Consistent with industry expectations, Hite believes that leisure travel will be the first to drive recovery, with a pickup expected toward the end of the second quarter. “Group business and corporate travel will be toward the latter part of the year before we see meaningful progress,” she said.
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Urban markets, however, will be among the last to recover, because they are much more dependent on business travelers and group business than other destinations, Hite said Tuesday during an American Hotel & Lodging Association event.
The 2021 forecast, indexed to 2019 key performance indicators, projects demand will increase to 76 percent of the 2019 level. “The upside risk is demand could accelerate faster, certainly if we get the virus under control and more vaccines happen,” Hite said, adding that STR is taking the vaccination rate and case numbers into account on a weekly basis for its forecast. “We do anticipate a new annual record for demand in 2023.”
Average daily rate for 2021 is expected to reach 82 percent of the 2019 level, with 2022 at 88.8 percent and 2023 at 93.1 percent. Revenue per available room is anticipated to be about 61 percent of the 2019 level, 81.5 percent in 2022 and 89 percent in 2023.
“Business transient and group business are needed by hoteliers to be able to drive the rate,” Hite said during the AHLA event. “They need those blocks of rooms to count on. … What we are seeing is corporations have corporate travel policies in place to restrict most of their corporate travel for the first and second quarters, then they start to ease those restrictions and spend more in the third and fourth quarters. That is playing into the demand recovery we are looking for.”
STR’s Final 2020 U.S. Hotel Forecast Adjusted Slightly Upward