LOS ANGELES — Hotel demand growth has outpaced expectations for this leisure-driven summer travel season, but that doesn't mean the overall recovery is further along than anticipated, forecasting experts said at the Americas Lodging Investment Summit.
During a session titled "The Numbers — What To Expect in 2021 & Beyond?" STR President Amanda Hite said second quarter demand growth for U.S. hotels hit 106% year over year, greater than the 98% STR projected. STR is CoStar's hospitality analytics firm.
Hoteliers have seemingly made the most of that demand uptick, once again beating STR's expectations for the quarter in rate growth, which hit 43% year over year compared to an expectation of 33% to 34%.
However, Hite warned not to expect a drastic move upward when STR issues a revised forecast for a year in the near future.
"I expect us to revise it up, maybe not so significantly, though," she said.
The reason for that reluctant optimism is continued uncertainty around travel conditions for the rest of the year. Business transient and group bookings still lag well behind leisure travel, and the pandemic is far from being a thing of the past.
"As I sit here today, we have more uncertainty than we did about a week ago or four weeks ago because of the number of COVID cases, and that's a variable in forecasting that we never imagined we'd be paying attention to," she said. "Certainly, the Delta variant is an issue. Will we see full lockdowns across the country? Probably not, but certainly in some markets and states, there could be capacity restrictions coming if case numbers continue to climb."
As it currently stands, STR still projects the hotel industry will not reach performance figures akin to 2019 until 2024.
"Certainly the growth over the last three months gives us some hope that it can be in the 2024 timeframe, but when you [factor in] inflation, you're probably looking at 2025 before we get back to 2019 levels," Hite said.
The best-performing markets share many of the same qualities, said Cindy Estis Green, CEO and co-founder of Kalibri Labs.
"They're all leisure resort destination kind of markets," she said.
Beach markets have seen particularly strong demand during the summer travel season, but they're not the only leisure markets thriving currently.
"Anything that's within a four- or five-hour drive radius of major urban areas, that was kind of the story with COVID when people started traveling," she said.
The high cost and limited availability of labor is still worrisome for hoteliers, and has made servicing the higher-than-expected demand difficult across the country.
Dave Eisen, director of hotel intelligence and customer solutions at HotStats, said the cost of labor is the No. 1 thing he's asked about. He said initiatives to not offer daily housekeeping have been successful in keeping labor cost growth somewhat muted, although the money spent on materials for cleaning have increased significantly.