Hotel Sector Suffers Coronavirus Hit
STR, Hendersonville, Tenn., said the hotel sector began showing COVID-19’s impact, with negative results in all three key performance metrics for the week ending March 14.
Compared to the prior week, hotels saw:
–Occupancy drop 24.4 percent to 53 percent.
–Average daily room rates fall 10.7 percent to $120.30.
–Revenue per available room tumble 32.5 percent to $63.74
STR said performance declines were uniformly distributed across hotel chain scales, classes and locations.
“To no surprise, the hurt continued and intensified for hotels around the country,” said STR Senior Vice President of Lodging Insights Jan Freitag. “The performance declines were especially pronounced in hotels that cater to meetings and group business, which is a reflection of the latest batch of event cancellations and government guidance to restrict the size of gatherings.”
Freitag said the most common question in the hotel sector is how far occupancy will drop and how long will this crisis last. “Through comparative analysis of the occupancy trends in China and Italy over the past weeks, we can with certainty say that we are not yet close to the bottom in the U.S.,” he said. “However, the timeline for that decline and the eventual recovery are much tougher to predict because there is still so much uncertainty around the COVID-19 case numbers in the U.S. and how serious citizens are when practicing social distancing. China and Italy saw a more abrupt decline in occupancy because of stricter lockdowns. That will dictate the speed of recovery.”
Each of the 25 largest U.S. markets registered double-digit occupancy and RevPAR decreases, Freitag said. ADR also fell in each market, but by a smaller percentage.
Seattle–which saw the first deaths on American soil from coronavirus–saw the steepest declines in each of the three performance metrics, STR said. Occupancy fell 55 percent to 32.9 percent, ADR fell 24.7 percent to $109.28 and RevPAR dropped more than 66 percent to $35.97.
STR reported San Francisco/San Mateo, Calif. posted the week’s second-largest RevPAR drop, as the metric fell 63 percent to $68.56 due to the second-steepest occupancy decreases. New York experienced the third-largest declines in occupancy (down 43.9 percent to 48.8 percent) and RevPAR (down 54.6 percent to $88.29) and New Orleans posted the third-steepest ADR drop as room rates fell 22.8 percent to $138.11.