Our Collective Annus Horribilis

Everyone has been touched by this pandemic in some way: Given the scope of the COVID-19 pandemic and its ripple effect across our health, the economy and the resulting emotional toll, no one on the planet has been left unscathed.
 
Some of us have lost loved ones or know people who have; many have lost jobs; others are at risk of losing homes from eviction or foreclosure in the future.
 
Others have seen the value of their businesses plummet. A lucky few have seen their wealth increase (I’m looking at you Jeff Bezos). But as 2020 winds down, it is clear we have all had a horrible year.
 
The term “annus horribilis” came into more common use when Queen Elizabeth of the United Kingdom and Commonwealth realms used it to describe 1992, her 40th year on the throne. It was not a good year for the Queen, with two of her children getting separated or divorced and the marriage of her eldest son headed in the same direction. There was also a serious fire at her primary home, Windsor Castle. As bad a year as that was for her, for many of us 2020 has been worse.
 
It is difficult to get a grasp on the scale of the pandemic, given the abstractly large numbers of cases and deaths in the U.S. alone. Total cases in the U.S. are in excess of 18 million as of 22 December (and rising by more than 175,000 per day). That is nearly the population of the state of New York. 
 
Even more staggering is the loss of life attributed to COVID-19, currently in excess of 320,000 people in the U.S. (see the link above for this information). Imagine if in one year, nearly every person in Honolulu were to die. But the reality is likely much worse, as according to the CDC, there have been as many as 700,000 more deaths (including COVID-19 deaths) than would be predicted based on the death rate in previous years. This is nearly the population of Boston or Washington, D.C. Globally, directly attributed COVID-19 deaths total over 1.6 million people, about the population of Philadelphia.
 
And we are nowhere near the end. In fact, Thanksgiving travel has led to even faster growth in cases and more deaths, a trend likely to continue to increase in the wake of year-end holiday travel. While a higher level of travel around the holidays may be good for the hotel industry in the short term, it is likely to weaken the extended outlook by delaying business and leisure travel in the months that follow. While the recently released vaccines will help in the long run, it will be many months before enough people are vaccinated to allow for normal economic activity.
 
Losing a loved one is a terrible thing, regardless of the reason. Millions of people are grieving the loss of loved ones, friends and acquaintances. Dealing with these losses is hard enough, but much of this could have been avoided with a coherent national strategy to stop or dramatically slow the spread of the virus. In its absence, even those of us who worked extremely hard to avoid transmission of the virus are now tired of the isolation months of social distancing has caused. This “mask fatigue” just makes things worse and will extend the duration of this crisis further.
 
When will this end? We don’t know and we can’t know. When will occupancy begin to climb in earnest as business and leisure travelers feel secure traveling and staying at hotels? Again, impossible to know. Certainly, a widely distributed vaccine will help but no one can accurately predict vaccine production and distribution timelines.
 
STR and others have provided detailed forecasts for 2021, but I have little faith in any of them. All forecasts are models based on assumptions, and those assumptions are likely to change as things develop. As someone who has been building models for the last 30-plus years, I am all too aware of how a change in one key input ripples through a model. For hotel forecasts, a big unknown is the level of GDP growth, which in turn will be determined by factors including the pace of vaccination production and distribution and how well federal relief measures succeed at stimulating economic growth.
 
And then there are the big unknowns: Will workers return to offices or continue to work from home? Will remote work lead to more travel as companies and organizations bring their workers together more regularly or send them to conventions and trade shows with more frequency to keep them engaged in their industry?
 
More broadly, what will the world look like? Will more people travel? Fewer?
 
We just don’t know.
 
David Loeb, a former stock research analyst, is founder of Dirigo Consulting LLC, which advises on capital markets, strategy and communications issues. Contact him at davidloeb@earthlink.net.
 
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