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Occupancy Rate Rebound Sparks Hope for Hotel Industry

Friday, June 19, 2020  
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Occupancy Rate Rebound Sparks Hope for Hotel Industry

Yahoo! Finance - June 19, 2020

The hotel industry, which had been crippled by the cascading effect of the coronavirus pandemic, is slowly regaining momentum. Per STR, the U.S. Hotel industry’s occupancy for the week ended Jun 13, 2020 has rebounded sharply from the historic lows in mid-April. 

Occupancy Improves Sharply

Per STR, occupancy for the week ended Jun 13 hit 41.7%, in sharp contrast to the industry’s historic low of 22% in mid-April. However, the occupancy is still considerably below the year-ago comparable figure of 73.6%.

Per report, the recent recovery has been driven by increase in occupancy at freeway locations. Norfolk/Virginia Beach, VA, reported 50% occupancy level. Moreover, Phoenix, AZ, New York, NY and Tampa/St. Petersburg, FL attained occupancy of 47.6%, 45.7% and 44.7%, respectively.

However, average daily rate (ADR) and revenue per available room (RevPAR) for the week ended Jun 13 came in at $89.09 and $37.15 down 33.9% and 62.6%, respectively.

STR’s senior director, consulting & analytics, Alison Hoyt said “As we have noted, the drive-to destinations with access to beaches, mountains and parks continue to lead the early leisure recovery. With more consistent demand, we’re beginning to see more pricing confidence in those areas as well.”

The Road Ahead

Meanwhile, hotel industry bigwigs Hilton Worldwide Holdings Inc. HLT, Hyatt Hotels Corporation H and Marriott International, Inc. MAR have withdrawn guidance for 2020 citing the virus outbreak. The crisis will continue to hurt the industry’s occupancy rate and RevPAR in 2020. Moreover, the industry participants are witnessing a sharp increase in expenses due to the coronavirus-induced shutdowns.

With meetings and conferences called off, business travelers grounded and leisure travelers forbidden to travel due to the pandemic, hotels worldwide have been witnessing booking cancellations and closures.

In May, the forecast for 2020 have been revised downward for 2020 owing to the coronavirus-induced crisis. Per a STR report, RevPAR for 2020 is anticipated to witness a steep decline of 57.5%, while average daily rate (ADR) is expected to fall 21.6%. Prior to the coronavirus pandemic, STR had projected flat RevPAR for 2020 — the lowest prediction since recession of 2009.

Moreover, hotel demand for 2020 is projected to decline 45%, while supply is likely to decrease 5.2%. Meanwhile, occupancy rate for 2020 is expected to fall 45.8%.

Occupancy, RevPAR and ADR are likely to be significantly down in 2020. However, the industry is likely to gain momentum in the coming months as global economy is gradually reopening.

Article originally published by: https://finance.yahoo.com/news/occupancy-rate-rebound-sparks-hope-130501787.html