US Hotel Occupancy Won’t Recover Until 2023

Research from a new survey indicates that the hotel industry will likely not fully recover until 2023.

Data company STR and consultant Tourism Economics said that they expect to see an average hotel occupancy of 40 percent for this year and 52 percent in 2021, which is down from an average of 66 percent for U.S. hotels in 2019.

“Performance recovery is going to remain slow and well off of the pre-pandemic pace until the context for travel improves and group business begins to return,” said Amanda Hite, STR president. “To show how far levels have fallen year over year, the 40 percent demand decrease we project for Q3 2020 will be a substantial improvement from the 57 percent decline realized during Q2.”

At the moment, hotels in beach destinations are doing better, some with occupancy rates as high as 67 percent. However, destinations like Hawaii, where summer tourism is largely off-limits, are experiencing much lower rates, around 20 percent.

Another challenge is the lagging business travel market and events like weddings and conferences.

According to Adam Sacks, president of Tourism Economics, COVID-19 will weigh on travel until at least the beginning of next year with a cautious recovery expected in the first half of the year.

Occupancy will recover much faster than revenue, which isn’t expected to hit normal levels until 2024.

Revenue per available room — a key hotel metric — will fall to $41.31 this year, down from $86.64 in 2019, STR and Tourism Economics said.

“People are going to expect a bargain for everything,” said Hilton president and CEO Christopher Nassetta last week.

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