Analysts Downgrade Hotel Forecast Again
STR and Tourism Economics once again updated their hotel sector forecast. They now expect a 57.5 percent revenue per available room decline this year and a 48 percent RevPAR increase next year.
Each percentage change was downgraded from a late-March forecast that called for a 50.6 percent RevPAR decrease this year followed by a 63.1 percent increase next year.
“Performance levels are dismal from every angle, but at the very least, weekly data through May 9 indicates that the industry has already hit bottom and begun a steady ascent,” said STR President Amanda Hite. “The rate of recovery will be slow even as distancing measures are eased and most of the country reopens.”
Hite noted consumer concerns about the safety of travel and leisure activity will dictate how long it takes the sector to regain its footing.
Tourism Economics President Adam Sacks said the initial recovery in consumer travel will likely be “uneven and staggered,” with gains in many markets determined by virus-specific factors rather than economic factors. “The gradual relaxation of social distancing in the second half of this year will primarily benefit regional leisure travel with the business and group travel recovery lagging,” he said. “We anticipate it may take until 2023 to recover to 2019 peak demand levels.”
STR showed 3,151 temporary hotel closures and 1,842 hotels reopened nationwide as of May 14. Hite called temporary hotel closures lower than anticipated. “The properties offline will reduce national supply in several months, but we do not anticipate a significant number of permanent closures,” she said. “Buyers are always out there with the confidence that they can make a property work based on the right level of transaction discount.”
STR and Tourism Economics expect the luxury segment will see the lowest 2020 occupancy at just 25 percent. Economy properties should see the highest occupancy at 45 percent. The 25 largest U.S. markets will likely perform worse than the rest of the country, the report said. New Orleans (28.0 percent) and San Diego (41.1 percent) are expected to show the lowest and highest occupancy levels, respectively.
