Analysts Lift 2021 Hotel Forecast, Lessen 2022 Growth Projections

STR, Hendersonville, Tenn., and Tourism Economics, Wayne, Pa., upgraded their U.S. hotel sector forecast for 2021 but lowered growth projections for 2022.

Full demand recovery remains on the same timeline for 2023, the report noted noted. Revenue per available room may have to wait until 2024 to surpass 2019 levels.

“Rather than improved expectations for the coming months, our upward revision for 2021 more reflects the surge in demand that has already occurred as well as room rates hitting an all-time high on a nominal basis,” said Amanda Hite, STR President.

But Hite expressed concern the industry could lose its primary demand source once the summer travel season officially wraps up. “In normal years, summer leisure demand would be supplanted by business travel and large corporate events, but with more concern around the Delta variant as well as delays in companies returning their employees to offices, it’s possible that businesses wait until early 2022 to put their people back on the road,” she said. “Even though we expect some of that demand to shift into 2022, we brought our projections down in comparison with a stronger-than-expected 2021.”

CBRE, Dallas, reported the hotel sector posted “record performance gains” in the second quarter compared with a year ago, when it was essentially shut down by COVID-19 restrictions. Demand more than doubled, occupancy gained 97.5 percent, revenue per available room jumped 180.5 percent and average daily rates grew by 42 percent. Compared with second-quarter 2019, when demand was much closer to long-term averages, demand was 13.9 percent less, occupancy was down 16.7 percent lower, RevPAR was down by 25.3 percent and ADR down by 10.4 percent due to continued weakness in business travel, luxury property closures and general pricing pressures.

Hite noted her firm’s full recovery projections remain similar with 2023 into 2024 as the finish line. “In the meantime, recovery is uneven with some leisure-driven markets ahead of where they were pre-pandemic and most of the major markets still well off the pace,” she said. “Add in staffing challenges in a lot of markets and the situation is still quite difficult for a lot of the country even though there is optimism for the years ahead.”

Tourism Economics Director Aran Ryan said the economic recovery has “considerable momentum,” underpinned by quite strong consumer demand and ongoing fiscal stimulus. “Though it is challenging to look through the current virus wave, we expect as public health conditions stabilize, the recovery in leisure travel demand will remain intact and the corporate travel recovery will resume its climb later this year,” he said.

Overall, the STR-TE forecast for 2021 calls for U.S. hotel industry occupancy of 54.7 percent, an average daily rate of $115.50 and RevPAR of $63.16.