Now that the hospitality industry is through almost the first quarter of 2021, there are plenty of reasons to have hope in what's on the horizon, chief among them vaccine rollouts worldwide spelling the end to yearlong lockdowns.
With new weekly COVID-19 cases once again on a downswing and warmer weather hinting at spring, hotel performance has improved over the past few weeks, much to the relief of hoteliers everywhere.
The new year does not come without its challenges, however, and benchmarking must once again adapt to COVID-19 considerations. Year-over-year comparisons, the hotel industry standard to judge performance, will soon look very different as this year’s performance is compared to that which occurred during the extreme lockdowns in the first quarter of 2020. The result will be percent changes that make tracking and understanding recovery somewhat difficult.
Fortunately, there are myriad ways to track recovery moving forward, including a simple index. Indexed data compares current performance to performance in a baseline period to determine what percent of the baseline has been achieved.
Indexing is not the only way to track COVID-19 recovery trends, and STR’s VP of Analytics Isaac Collazo and Asia-Pacific Area Director Jesper Palmqvist will explore benchmarking post-pandemic in more detail during the first Hotel Data Conference: Global Edition on March 25, hosted by STR, CoStar's hospitality analytics firm.
STR prefers using 2019 as the baseline year for COVID-19 recovery indexes, as it was the last year of “normal” performance pre-pandemic. To create an index, divide current performance by baseline performance for a given time period, and multiply by 100. In this case:
Demand Index = Weekly Demand 2021 / Weekly Demand for the same week in 2019 *100
The result reveals what percent of “normal” demand hotels achieved on a weekly basis. For the most recent week ending March 6, U.S. hotels reached almost three-quarters of normal demand. Using STR’s new Market Recovery Monitor to analyze the index reveals the hospitality industry is currently in recession.
Kelsey Fenerty is a research analyst at STR.
This article represents an interpretation of data collected by CoStar's hospitality analytics firm STR.