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The U.S. hotel industry suffered its worst record year in 2020 as the coronavirus pandemic severely curtailed business travel and Americans gave up vacations to stay home.
According to data provider STR, last year hotels reached the lowest occupancy rates and revenue per available room.
With employment of just 44%, the industry surpassed 1 billion unsold overnight stays for the first time in history, overshadowing the 786 million that remained unsold during the 2009 global financial crisis.
And with available space revenue down nearly 48%, the industry is expected to show near zero profit for 2020, according to STR.
And in 2021, conditions will remain poor before they begin to improve.
The first half of the year will look almost like 2020, as Americans begin to line up for vaccine photos, according to STR and the American Hotel and Accommodation Association.
But in the second half of the year, the lingering search for experience could finally unfold, strengthening the industry and offering a first look at post-pandemic life – though not enough to pull the industry out of turmoil.
“We, along with airlines and restaurants, were the first and most severely injured,” said Chip Rodgers, president and CEO of AHLA. “Since most other businesses are coming out of this, we’re still going to hurt for a while.”
There is room for hope. Insiders in the hotel industry are looking forward to summer, expecting a repeat of last year, when Americans finally jumped in their cars and drove off, looking for a change of scenery and a break from Zoom’s calls.
Demand was strong as passengers took advantage of low hospitality prices and booked rooms in roadside hotels and motels even after Labor Day, which traditionally marks the end of summer.
However, increased leisure travel in the second half of the year will not save hotels from the difficult 2021, as corporate travel is expected to remain depressed.
Business travel accounts for 60% to 65% of all revenue in the industry, Rodgers said.
Hotels in city centers with congress halls were among the worst hit in 2020 as business conferences became virtual. An AHLA report says that in 2021, business travel will still fall by 85% compared to two years ago.
And in general, the hotel industry is preparing for years of potential pain.
According to the AHLA, the journey will not return to the levels from 2019 to 2024.
But even this recovery forecast for 2024 comes with an asterisk, because although the number of rooms sold may return, room prices will return to levels from 2019 to 2025, according to Jan Freitag, national director of analysis. the hospitality market in CoStar Group, which owns STR.
As the outlook looks, Freitag says the industry is trying to maintain hope.
“The story that the people at the hotel are telling each other right now is that it could be the 20s of the roar, that there is all this restrained demand,” Freitag said.
“There is more money in the banks waiting to be spent because we have already bought everything we need,” he added. “What we couldn’t do was have experience. Once the vaccinations hit, it would allow us to survive again and the gateways would open.”