For the U.S. hotel industry, 2021 is expected to be significantly better than 2020 but still much worse than 2019, according to the latest forecast from STR.

STR is Hotel News Now’s parent company and a division of CoStar Group.

During the “Hotel Performance Outlook” session of the ALIS Winter Update online conference, STR President Amanda Hite said her company’s analysts have slightly downgraded their outlook for full-year 2021, pushing occupancy projections below 50% for the year.

“This really points to the decline that we saw in the last two months of the year,” she said, noting a small spike in hotel demand during the summer months of 2020 again faded in November and December.

“You saw a peak in the summer where everyone had this pent-up aspiration to get out and travel after being locked down for so long,” she said.

Hotel performance in 2021 is expected to be defined by two halves. Hite said STR hopes “to see some acceleration” around the middle of the year if vaccine distribution progresses as planned.

“Certainly leisure travel … will be driving that,” she said. “But we do expect a little more overhang on the group business that will go on until the fourth quarter of this year.”

Hite said the U.S. hotel industry isn’t expected to reach demand levels comparable to 2019 until 2023, and even then, hotel average daily rate and revenue per available room will still lag, according to current projections.

Hotel occupancy for the year is forecast at roughly 75.9% of 2019 levels; ADR is expected to reach 82.1% and RevPAR 60.7% of 2019 levels.

“We think that’s pretty reasonable given that we don’t expect the rebound to begin meaningfully until the middle of the year,” she said. “Certainly, there’s upside as the virus grows more under control and more vaccinations are happening. So, we do anticipate that we’ll see a new annual record for demand in 2023.”

Hite said the ongoing pandemic has forced STR to consider metrics the company never thought would be relevant to hotel industry forecasting, notably the percentage of the U.S. population that has received a COVID-19 vaccine.

As of Jan. 20, just 4.3% of the population was vaccinated, she said.

“There’s still a long way to go to get to that 60% mark (the Centers for Disease Control and Prevention) are targeting by June,” she said.

She said in the final 10 months of 2020, the industry lost out on $83.9 billion in revenues, which is a significantly larger hit than the fallout from the Great Recession, when roughly $16.9 billion was lost over a 19-month period.

Former White House senior economic adviser Todd Buchholz said there is hope for traveler sentiment to improve.

During the “How the Inauguration & Pandemic Will Drive the Economy” session at the same conference, he said the economy in 2020 is best described as a cessation, rather than a recession or a depression.

“In a typical recession or depression, the economy unravels because there’s been excess speculation or because there’s been excess inventories built up like unsold cars or unsold homes, and it takes a while for those to unravel,” he said. “In a cessation, and as a result of COVID, the economy shut down because people were told and for themselves decided ‘I will not go outside. I will not shop. I will not travel.’”

Because of that key difference, he said the bounce back could be relatively swift.

“It’s easier to bounce back from a cessation than a recession,” Buchholz said.

Recent surveys from the American Hotel & Lodging Association claimed 56% of respondents were looking to get back on the road in 2021, which is “not far below the typical averages,” he said.

“Can travel and leisure boom? That’s our question, and I think the answer is yes,” he said, noting there is significant pent-up demand in the travel sector.

Buchholz said executives and property-level teams should be preparing for a rebound.

“My best guess is that consumers have the wherewithal to fuel a strong recovery in travel and tourism,” he said, pointing to good credit and low debt levels among consumers.