The current surge in virus cases will dampen occupancy levels for first half of the year, with recovery predicted in the second half
With the number of COVID-19 cases surging in the US, expectations for the hotel industry will be curbed through the first half of 2021, according to the latest forecast from CBRE Hotels Research. However with the widespread rollout of effective vaccines,
the outlook is for the lodging industry’s recovery to ramp up in the second half of the year.
During the first half of 2021, the average national occupancy level is projected to run at 44.4 percent, according to CBRE’s Q3 2020 edition of Hotel Horizons. This is projected to increase to 55.7 percent during the second half.
CBRE analysts predict that by 2024, occupancy and average daily room rates will return to levels last seen in 2019. This is a somewhat more pessimistic outlook than forecasts earlier in the year
which had predicted a return of the hotel industry by 2023. However the severity and prolonged duration of the pandemic has pushed any expected recovery further out.
In general, CBRE projects properties in the lower-priced chain segment will recover sooner than the higher-priced hotels. The one exception is luxury hotels, which have seen occupancy levels decline significantly but have still maintained relatively stable room rates.
“The confidence provided by an effective vaccine will serve to sustain the relatively strong leisure travel patterns observed during the summer of 2020, plus initiate a significant return of corporate travelers
during the second half of 2021,” said Bram Gallagher senior hotel economist with CBRE Hotels Research. “Group demand, on the other hand, will lag in recovery because of the advance-booking nature of this segment.”
The CBRE research also finds pricing power for US hoteliers will probably be sustained by a drop off in new hotel construction. The latest forecast predicts US hotel supply to increase by 1.8 percent in 2020, and another 1.4 percent in 2021. However, by 2022, the net gains in new rooms will likely to dip below 1 percent in 2022, thus lowering inventory just as the demand for lodging picks up.
While generally the US hotel industry should recover by 2024, some hotels may see a return to 2019 levels earlier, as many have enacted cost control measures in 2020 to bolster declining revenue, and are likely to keep them in place for the foreseeable future. cbre.us