NASHVILLE, Tenn. — There is a lot of good news to pull out from STR's latest full-year 2021 forecast for the hotel industry — leisure demand surpassing pre-pandemic levels and hoteliers holding rate through the downturn — but a hazy outlook for corporate spending is keeping growth projections for the remainder of the year somewhat muted.
STR is CoStar's hospitality analytics firm.
Speaking during the "Prognosticating Post-Pandemic: The U.S. Hotel Forecast" panel during the 2021 Hotel Data Conference, STR President Amanda Hite said business transient travel will end the year at 70% of what was seen in 2019, compared to leisure transient ending the year 17% higher than that year.
"So we still have a long way to go to get back to prior 2019 numbers, and we don't expect a lot of group demand," she said.
Hite said the year-over-year growth numbers are massive but that's just because hotel performance was historically bad in 2020.
The updated forecast for U.S. hotels projects occupancy to grow 31.5% year over year to 51.7% and average daily rate to increase 12% to $115.50, fueling a revenue-per-available-room increase of 47.3% to $63.16. Early projections for 2022 call for a 13% year-over-year increase in occupancy, a 6% increase in ADR and a 19.7% increase in RevPAR.
Hite said those growth numbers in rate seem more muted compared to 2020 but that's in large part due to hoteliers' surprising ability to hold strong on rates even during a historic drop in demand and a strong rebound in rate as summer leisure travel picked up this year.
"It has been phenomenal to watch the revenue management that's happening over the last quarter with the demand that's been out there," she said.
Monica Xuereb, chief revenue officer for Loews Hotels & Co., said the summer demand recovery wasn't felt equally across all hotels, and that will remain the case until corporate travel spending returns.
"Most of [Loews] leans more heavily to the luxury and upper-upscale chain scales, so our 2021 forecast is a little bit less optimistic than obviously the overall U.S. forecast," she said. "But on a positive note, we're at 91% of the average rate that we had in 2019."
Beyond hotel chain scales, the recovery has also been bifurcated between urban and resort properties, she said.
"Resorts are doing great, but the city hotels are definitely challenged," she said.
Tyler Morse, chairman and CEO of MCR, said he's still feeling optimistic about the recovery in large part due to still-high leisure demand. He added there will be significant inflation in the near future but key performance metrics are likely to exceed STR's projections.
"In 2019, there was $4 trillion in U.S. bank accounts for U.S. consumers. Today there is $6 trillion. It's gone up by fully 50%," he said. "People have a ton of money."
Morse is decidedly less optimistic for corporate travel. He said companies are being overly cautious with their travel decisions and budgets.
"The corporate market is soft because generally COVID has allowed the general counsel and the head of HR of every corporation in America to conspire to kill travel," he said. "And they have done exactly that, and that has hurt Monica's business from a group and corporate standpoint, but the leisure people, man they are out there blowing it out."
Speaking earlier in the day during the "Risk to Recovery in the U.S. Economy" session, Tourism Economics director of lodging analytics Aran Ryan said the uptick in COVID-19 cases is a clear red flag for the trajectory of travel.
"Public health conditions will determine what happens in the economy and what happens in travel, and at the moment, it does feel like we're going in the wrong direction," he said. "We're seeing the spread of the Delta variant and rising hospitalization rates."
Ryan said it's hard to project what will happen after COVID-19 spikes, in part because economists and prognosticators are asked to "absorb medical information we don't fully understand to try to see what's on the other side."
But this latest spike is likely to behave differently than previous upticks in cases because "we have three very effective vaccines that are widely available in the U.S.," Ryan said.
"We now have a situation where we have something that substantially reduces the health risks so that those that are vaccinated are protected against the worst outcomes," he said.