US Hotel Demand May Not Fully Recover From COVID-19 Until 2023

According to a revised forecast, just released by data-analytics firm STR and insight group Tourism Economics, consumer demand for U.S. hotel products is projected to take until 2023 to fully recover to its pre-pandemic levels.

This newest prediction comes despite the fact that the latest numbers have shown week-over-week occupancy levels improving over the past two months, reported Business Travel News.

In terms of occupancy, STR’s Senior Vice President of Lodging Insights, Jan Freitag, said, “Compared with our last forecast, we actually improved our demand projection for 2020 from -45.0 percent to -36.2 percent, but we expect it to take eleven quarters for the number of room nights sold to rise to the corresponding levels of 2019. Similarly, it will take until 2023 for occupancy to reach the 20-year historical average.”

He explained that, given decreased overall occupancy levels and the expectation that hoteliers will discount their rates to compete for market share, average daily rate (ADR) could take longer to recover, even while normalizing progressively each quarter.

Freitag said that STR’s revised ADR 2021 projections actually rose to 5.2 percent from the 1.7 percent year-over-year growth listed in the prior forecast. “Despite this better growth rate next year, we do not see ADR recovering to pre-2020 levels in the next five years,” Freitag explained.

“The good news is that demand and occupancy continue to rise slowly each week, and while slow, recovery should continue, provided the country avoids significant setbacks in its progress against the coronavirus,” Freitag said.

Essentially, the outlook for the remainder of 2020 seems to have slightly improved, while the pace of recovery throughout 2021 appears likely to be slower than experts had formerly anticipated. The prior forecast estimated a year-over-year RevPAR decline of 57.5 percent in 2020 and an expected growth of 48 percent in 2021. The updated forecast predicts slower growth in 2021 (down 50.6 percent year-over-year), but also less growth during 2021 (40.6 percent).

“The worst is behind us,” remarked Tourism Economics’ president, Adam Sacks. “Recent performance has shown travel activity is picking up tentatively. Though COVID-19 will remain a defining factor through the first quarter of 2021, the outlook anticipates further gains in travel as confidence is gradually restored and restrictions are eased.”

For more information, visit str.com.

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