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Connecticut Lodging Association
1/25/2022
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STR, TE slightly upgrade latest U.S. hotel forecast |
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Underpinned by continued strengthening in average daily rate (ADR), STR and Tourism Economics have slightly upgraded the U.S. hotel forecast, just released at the Americas Lodging Investment Summit (ALIS).
The timeline for recovery remains mostly the same from the previous version of the forecast released in November. On a nominal basis, ADR is expected to surpass the pre-pandemic comparable this year, while revenue per available room (RevPAR) is anticipated to exceed 2019 levels in 2023. When adjusted for inflation, however, full recovery of ADR and RevPAR are not projected until after 2025. Occupancy is projected to surpass 2019 levels in 2023.
“The industry recaptured 83% of pre-pandemic RevPAR levels in 2021, and momentum is expected to pick up after a slow start to this year,” said Carter Wilson, STR’s SVP of consulting. “With so much of that RevPAR recovery being led by leisure-driven ADR, however, it is important to keep an eye on the real versus the nominal. Terms of recovery are not playing out evenly across the board, and many hoteliers have had to raise rates to minimize the bottom-line hit from labor and supply shortages. We are anticipating inflation to remain higher throughout the first half of the year with a gradual leveling off during Q3 and Q4. If that happens, and we avoid major setbacks with the pandemic, this year will certainly be one to watch with demand and occupancy also shaping up to hit significant levels during the second half.”
“Looking beyond the first quarter, the backdrop for sustained travel recovery is strong,” said Aran Ryan, Tourism Economics director. “As the public health situation improves, sturdy labor market fundamentals, healthy consumer balance sheets, and continued business investment are anticipated to support further lodging demand growth and pricing gains.”
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Report: Hotels Continue Moving Toward Recovery In 2022 |
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The hotel industry will continue moving toward recovery in 2022, but the path will be uneven and potentially volatile, and full recovery is still several years away, according to the American Hotel & Lodging Association (AHLA)’s 2022 State of the Hotel Industry Report. The report, which reveals shifts in consumer and business sentiment, was created in collaboration with AHLA Silver Partner Accenture and is based on data and forecasts from Oxford Economics and AHLA Platinum Partner STR.
The top findings of the report include:
- Hotel occupancy rates and room revenue are projected to approach 2019 levels in 2022
- The outlook for ancillary revenue, which includes food & beverage and meeting space, is less optimistic
- Hotels lost a collective $111.8 billion in room revenue alone during 2020 and 2021
- Leisure travelers will continue to drive recovery: in 2019, business travelers made up 52.5% of industry room revenue; in 2022, it is projected to represent just 43.6%
- Business travel is expected to remain down more than 20% for much of the year, while just 58% of meetings and events are expected to return; the full effects of Omicron are not yet known
- Changing traveler segments, including the rapid rise of bleisure travelers—those who blend business and leisure travel—are impacting how hotels operate. In fact, one study of global business travelers found 89% wanted to add a private holiday to their business trips in the next twelve months
- In this new environment, technology will be even more critical to a property’s success, according to AHLA Platinum Partner Oracle Hospitality—with hotels investing in technology to meet the needs of both guests and employees today and in the future
“Hotels have faced enormous challenges over the past two years, and we are still a long way from full recovery. The uncertainty about the Omicron variant suggests just how difficult it will be to predict travel readiness in 2022, adding to the challenges hotels are already facing,” said Chip Rogers, president and CEO of AHLA. “The slow return of business travel and fewer meetings and events continue to have a significant negative impact on our industry. The growth of leisure and bleisure travel represents a shift for our industry, and hotels will continue evolving to meet the needs of these ‘new’ travelers.” Download report.
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