NewsWire: 1/26/21
- According to a new report, hotels saw their worst year ever in 2020. With travel not expected to return to pre-pandemic levels until 2024, hotels are expanding their services and rolling out new branded products to survive the lull. (Adweek)
- NH: It’s official: 2020 was the worst year on record for the hotel industry. In its latest annual report, the American Hotel & Lodging Association offered a bleak summary of 2020 and forecasted that things won’t get much better this year. Leisure and business travel are expected to pick up as more people get vaccinated, but overall the industry does not expect demand to return to pre-pandemic levels until 2024.
- In 2019, average annual hotel occupancy in the U.S. was 66%. In 2020, this plunged to 44%. Annual room revenue fell nearly 50% from $168 billion to $84.6 billion. This year, hotel occupancy is projected to average 52.5%, which means that most hotels still won’t be breaking even. Hotel employment levels also remain sharply down: The unemployment rate within the industry is estimated to be around 20%.
- What will bring travelers back? About a third (34%) of Americans say that they would feel comfortable staying in a hotel right now. But a bigger share (48%) say that they’ll feel comfortable once they or most other Americans have been vaccinated or when a vaccine is widely available.
- As was the case pre-pandemic, price is still the #1 factor influencing where people choose to stay. But now the second most important factor is cleanliness and safety protocols, which have vaulted past other factors like location, room quality, and amenities. This suggests that hotels will have an edge over home-sharing companies where cleaning practices are not standardized (see “Goodbye to the Sharing Economy?”)--but they still have to wait for travelers to return. The hotels most likely to recover first are lower-tier hotels, as well as hotels near outdoors recreation areas (like national parks) where social distancing is easier.
- In the meantime, hotels are getting creative to bring guests in. Hyatt (H) was the first major brand to launch a “work from anywhere” program that rents out rooms for the day to remote workers, which they ended up expanding after it took off. Marriott (MAR) and Hilton (HLT) have also started marketing rooms as day-use offices.
