The recovery from the pandemic makes forecasting a harder endeavor than usual.

Here is what I suggested last year should happen in 2021. Making predictions while the ground is shifting under our collective feet is difficult.

So rather than trying to guess at what will happen, here are five questions whose answers will determine the recovery trajectory for U.S. hotels.

Between Wednesday and Friday of the U.S. Thanksgiving week, most of the world learned a new Greek letter: Omicron. While scientists figure out the impact of the new strain, hoteliers are wondering what impact it will have in 2022. The omicron variant is being detected around the world in larger numbers each day. But the question that matters more is whether the omicron variant will stand up to current vaccinations.

Throughout 2021, American consumers voted with their wallets and traveled to the beaches and mountains, protected by two or three shots of a vaccine. Clearly, protection from the virus, while not perfect, has a positive impact on the desire to travel, be it for business or pleasure. So if vaccines are a robust response to the new strains, then the future of the ongoing recovery looks good. The question for 2022 is how will the U.S. hotel industry react to even newer strains? And heads up: As of this writing there were six more letters in the Greek alphabet.

In the past it was an unquestioned truth that business travel depended on meeting face to face. But after spending two years on Zoom or Microsoft Teams, white-collar employees have shown they are productive even when they are not in the same room. Companies are having a hard time luring their staff back into their cubicles, asking them to brave a sometimes-grueling commute and time away from family.

But if employees are not in the office, then why should partners and suppliers try to visit them in person? It looks like an online meeting works quite well. That implies fewer trips booked and fewer room nights consumed.

Then again, onboarding and forging team culture are easier accomplished in person, and with plenty of workers starting a new job there is also plenty of need to gather teams in person. Or will those meetings just take place off-site, inducing meeting room demand for hotels?

The question for 2022 is how will the return-to-office model be modified to accommodate the competing tensions around being back in the office?

The omicron variant adds a large question mark to this question. International travel started up in earnest in the summer and fall of 2021, but when omicron emerged and international borders shut, we had a taste of things to come. It is not unreasonable to assume that other mutations will be found, but their impact is unknown. But if governments react to each new variant with sharp global travel restrictions, then the international room demand will continue to be wanting.

On the other hand, Americans who have gotten two shots plus a booster or have recovered from an infection may have some feeling of invincibility and eagerness to get back abroad. This could affect high-end hotels in the U.S. and their demand as the audience that stayed home in 2020 and 2021 will not go back overseas, taking their high-end room rates with them. The question for 2022 is whether travelers eager to go abroad, or who come here from other countries, will they try to navigate the ever-changing rules and regulations and increased testing costs, or simply remain put and largely stay in their home countries?

“Never let a good crisis go to waste” has acquisition teams eagerly eyeing the current hotel landscape. The global availability of debt and equity capital has never been better, and hotel assets and hotel companies provide a prime target of the funds amassed looking for an opportunity.

For one, performance results for the industry and some individual hotels are still well below 2019 results, so the upside is well-understood. The case for large scale is easily made, especially after a pandemic when it became clear that a larger portfolio can insulate owners or operators from the large performance swings by world region or city to city. And brand loyalty programs work even better the more opportunities customers see in earning and redeeming points.

The question for 2022 is which large entities will feel that the current values are offering unprecedented opportunities for their shareholders or investors and necessitate buying or merging with a main competitor.

No other question consumed so much time and energy in 2021 than the conversation about staffing levels, turnover, hiring new staff and wage growth.

The hotel industry is struggling to make up for lost talent. Part of the solution is likely fewer staff because of innovation through technology — think keyless check-in — and optimization — think fewer items on the breakfast menu. But the obvious answer is to pay the existing and new staff more and that will have to happen in 2022.

But then what? Are higher wages enough to permanently attract a new generation of workers or did the of cost of doing business just go up and the labor situation remains challenged? The question for 2022 is which management team or operator can provide the sustainable blueprint for attraction and retention of new hires and at what costs?

As the year 2022 progresses, my colleagues and I will continue to revisit these themes and questions in our respective markets and in conversation with clients and report back on the changes we are seeing as the recovery for U.S. hotels continues.

Jan Freitag is the National Director for Hospitality Market Analytics at CoStar.

The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or CoStar Group and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to contact an editor with any questions or concern.

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