Latest hospitality data points to “long, slow road” for recovery in U.S.

Key performance metrics are continuing to decline for the hotel industry in the United States, reflecting the ongoing impact of the coronavirus COVID-19 pandemic.

According to global hospitality data company STR, hotels in the U.S. saw revenue per available room (RevPAR) drop by more than 80% in the week ending March 28 compared to the same week one year ago. Occupancy was down more than 67% and average daily rate (ADR) was down nearly 40%.

“Occupancy continues to fall to unprecedented lows, with more than 75% of rooms empty around the nation last week. As projected in our U.S. forecast revision, 2020 will be the worst year on record for occupancy,” says Jan Freitag, STR’s senior vice president of lodging insights.

And in a webinar to share the latest data, Freitag adds: “I am not saying this is the bottom and we are now in recovery. I’m saying this is going to be a long, slow road with these double digit, 80 to 90%, RevPAR declines going forward for the near future.”

Looking at specific U.S. markets, New Orleans saw the steepest decline in RevPAR (-92.8%) due primarily to the fact it also had the second largest decrease in occupancy (-84.9% to 12.7%) and ADR (-52.3%).

Oahu Island, Hawaii, experienced the steepest drop in occupancy (-86.4% to 10.5%).

For the full year, STR forecasts the U.S. to see a 51% drop in RevPAR and a 43% drop in occupancy in 2020.

Those declines are worse than what the company predicts for Europe (-37% in RevPAR and -27% in occupancy) in part, says STR’s senior manager of research and analytics Natalie Weisz, because the U.S. traditionally gets about 20% of its total arrivals from China, whereas in Europe that figure is just 2%. The greater decline in the U.S. is also expected due to the travel ban in the U.S. impacting arrivals from some European countries. 

Weisz says for Europe markets that STR forecasts, “In 2021, we are expecting a quite significant bounce back... so good growth but of course it’s coming from a low base. We aren’t expecting [RevPAR] levels to return to 2019 levels until 2022.”

The forecast is similar for the U.S. RevPAR in 2019 was $87 and it’s expected to be just $43 for 2020 and $70 for 2021.

Indications from China

STR says the news out of China continues to show some positive aspects, with 88% of the company’s sample hotels now back in operation. 

“And over the month from the fifteenth of February through to the middle of March, we saw occupancies go from around 10% to around 20%. And then really in the last two weeks we’ve seen a jump up quite significantly from 20% to around 50% for mainland China as a whole,” says Robin Rossman, STR’s managing director, international.

“So really good to see that recovery not just continuing but accelerating, but it has differed by market.”

Rossman says occupancy is being pushed up by spikes on Fridays and Saturdays – an indication that demand in China is initially coming back from weekend leisure travelers more than weekday business trips.

Performance has varied from market to market and by hotel class, with midscale and economy hotels showing better recovery than more high-end properties.

“And what we find is those hotels that are city center, higher density and towards the top end of the market are finding it a bit more difficult to recover. Whereas those that are more rural, more spaced out, more ability to practice social distancing are having a faster recovery. And also those at the bottom end where companies that are cost sensitive are choosing to go for the cheaper options,” Rossman says.  

But Freitag notes the recovery trajectory in the U.S. may be very different than what is happening in China where the lockdown was more comprehensive.

“There will not be a federal response in the U.S... it’s more of a hodge-podge,” he says.

“So recovery is likely to be elongated because some states with get hit later, throughout April.”

But another positive sign from China relates to the event industry. Rossman says the country’s China Food and Drinks Fair is on track to take place May 21 to 23, having been postponed from its original date in late March. Last year the event attracted 400,000 people and 4,000 companies. 

STR’s reports are based on data from 68,000 properties and 9.1 million rooms around the world.