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COVID-19

Like Airlines, Hotels May Not Recover Until 2024

Like Airlines, Hotels May Not Recover Until 2024
Joe Cortez

Just as the airline industry is suffering, hotels are facing a recession of their own. Although industry organizations have done what they can to help hotels weather the storm, two consultancy groups say that like the air carriers, hotels may not see pre-COVID levels of occupancy until 2023.

As airlines struggle to get passengers to fly once again, hotels may be facing a similar problem getting guests to stay at their properties. ABC News reports hotels may not recover from the COVID-19 pandemic until 2024 at the earliest.

Without Travel, Hotels Struggle to Stay Half-Occupied

The data comes from a forecast by hotel consultants STR and Tourism Economics. Under their models, they predict global hotel occupancy will stay around 40 percent for the remainder of the year. Occupancy could grow to 52 percent in 2021, but would still be well below the previous high of 66 percent in 2019.

Hotels at traditional tourist destinations within the contiguous United States are best prepared to weather the storm, as road travel is taking the place of airline travel in 2020. STR noted that places like Norfolk, Virginia and Galveston, Texas had occupancy rates as high as 67 percent during the summer months. But without tourists on aircraft, hotel occupancy in Hawaii has hit lows of 20 percent throughout the traditional travel months.

Tourists are not the only reason hotels are suffering. According to analysis by Tourism Economics, the continued lack of weddings, business travel and conferences are all major reasons why hotels could face a recession through the next four years.

As hotels come back online and demand grows, both consultants say midscale customers will lead the charge. STR previously noted that budget and midscale hotels are recovering quicker than luxury hotels, as those travelers who are willing to get out during the pandemic are driven by price more than anything else. In addition, the 2020 J.D. Power and Associates Hotel Guest Satisfaction survey found travelers are demanding more from their hotels, including communications about changing hotel amenities and precautionary measures due to the COVID-19 pandemic.

Despite Outlook, Hotels Are Still Welcoming Travelers

Even though the outlook is bad, hotels are still doing everything they can to welcome travelers back to their hotels. While Best Western, Hyatt Hotels and Hilton Honors are extending loyalty status of elite members, Wyndham Rewards is reducing their elite status requirements through the end of the year and offering Gold status to essential workers.

View Comments (6)

6 Comments

  1. strickerj

    August 17, 2020 at 4:13 pm

    I don’t see any actual data behind these predictions… based on the unpredictability of this pandemic, any predictions beyond a few months are essentially meaningless.

  2. sdsearch

    August 17, 2020 at 7:39 pm

    There’s another reason midscale hotels are doing better. They’re giving some sort of breakfast in most cases, while full-service hotels have eliminated restaurant service. lounge service, and room service (don’t have any of those even for take out) in too many cases. So you actually get more at midscale hotels than at the so-called “full service” which have deteriorated in many cases to “no service” hotels.

  3. swiss_global

    August 22, 2020 at 9:00 am

    It looks like the situation is very different depending on the region, even within a small country such as Switzerland. Some hotels in Grisons (the eastermost state, location of Davos for instance) had the best summer ever with many hotels operating at 100% occupancy since late June. Others, in a similar setting, such as Lucerne had a terrible summer. Why? Lucerne very much counted on Asian tourists, who did not travel. Meanwhile, Grisons has a strong domestic and European customer base who came in much higher numbers.

  4. edgewood49

    August 23, 2020 at 7:39 am

    I disagree with sdsearch, the midlevel hotels are doing somewhat better due to their price point, locations and sheer numbers. ALL hotels have the same problem generating sufficient cash to pay debt service. Given the high rate of equity/venture capital that purchased large blocks of properties many many times paying over book price now have to support that debt service. Even before the virus came into our lives there was the beginnings of a slow down in new construction of hotels in general. Hotel properties much like the airlines will see older underperforming properties shuttered.

  5. troyintn

    September 4, 2020 at 12:20 pm

    Overall I see it simpler. The full service hotels are located in downtown, who wants to visit the middle of any city with everything closed the mid tier is located in the suburbs, near parks and other activities that are open.

  6. edgewood49

    September 5, 2020 at 12:46 pm

    Now we have a all in the US telling us that 65% of Americans may not get the CV19 vaccine when it first comes out not “trusting” it. Frankly I agree my health care comes from the VA so will be interested to see what they say

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