The number of unsold hotel rooms across the United States in 2020 far exceeded those left empty in the worst year of the Great Recession, putting the industry in a deep financial hole that could take years to fill.
Hotel industry research firm STR, which is owned by CoStar Group, reported that demand dropped so much after the coronavirus pandemic hit that the number of unsold rooms shot past 1 billion last year. In 2009 during the last recession, the number of unsold rooms reached 786 million.
Group meetings vanished when the pandemic struck in mid-March, hitting the high-end, full-service hotels the hardest. Those hotels stayed roughly a third filled through most of the pandemic months before ending the year at about a quarter full.
Many hotels closed temporarily, and some never reopened. As a result, lenders became hotel owners while bargain buyers found success in snapping up properties at hefty discounts.
Leisure travelers took to the roads rather than flying, which helped limited-service hotels survive. Economy hotels performed the best, particularly those along interstates, in suburban areas and in small-town hotels. Travelers seemed to favor beach and mountain destinations.
Lower demand across the board, however, pushed average occupancy to 44%, 22 percentage points lower than 2019, which was an all-time high, said Jan Freitag, CoStar’s national director for hospitality analytics.
Revenue per available room for upper-end hotels was down more than 50% for the year. Freitag said that revenue per available room at limited-service hotels was down 30% to 50%. Last April, revenue per available room was 80% lower than in 2019, the worst decline in STR’s 36-year history of tracking hotel data.
“It is clear that the recovery for the upper-end hotels can only happen after mass vaccinations and mass immunization is in place,” he said. “The 2020 results will take a while to repair, especially since these low occupancies give hoteliers little to no pricing power.”
STR’s forecast has group U.S. business beginning to come back in the third quarter if vaccines reach the federal government’s distribution goal of most people being vaccinated by summer.