IN A WEEK of bad news, the numbers tell a dismal tale. Occupancy continues to slide down, millions of people are out of their jobs and the forecast for the near future, a future in which the COVID-19 pandemic still rages, is bleak.
During the second week of March, occupancy for U.S. hotels dropped 56.4 percent to 30.3 percent, RevPAR dropped 69.5 percent to $28.32 and ADR sank 30.2 percent to $93.41, according to STR.
“RevPAR decreases are at unprecedented levels—worse than those seen during 9/11 and the financial crisis,” said Jan Freitag, STR’s senior vice president of lodging insights. “Seven of 10 rooms were empty around the country. That average is staggering on its own, but it’s tougher to process when you consider that occupancy will likely fall further. With most events cancelled around the nation, group occupancy was down to one percent with a year-over-year RevPAR decline of 96.6 percent. The industry is no doubt facing a situation that will take a concerted effort by brands, owners and the government to overcome.”
San Francisco/San Mateo, California, recorded the worst declines, with occupancy dropping 80.7 percent to 16.6 percent, ADR falling 44.7 percent to $151.25 and RevPAR declining 89.3 percent to $25.08.
The COVID-19 pandemic is projected to cause the loss of 5.9 million jobs in the U.S. travel industry by the end of April, according to the U.S. Travel Association. A previous analysis had forecast the loss of 4.6 million jobs before May.
“The coronavirus crisis is hitting the travel economy hard, and it’s also hitting fast,” said Roger Dow, USTA president and CEO. “These new figures underscore the extreme urgency of financial relief for travel businesses—83 percent of which are small businesses—so they can keep paying their employees. Not only are workers suffering right now, but if employers are forced to close their doors, it is unknown when or if those jobs will ever come back.”
Dow said it is urgent that Congress pass the Coronavirus Aid, Relief & Economic Security Act that would provide small business loans and increased unemployment payments to mitigate the impact of the virus on the industry. Congressional negotiators settled on a deal to pass the CARES Act late Tuesday. The Senate approved it Wednesday and the House is expected to vote on it Friday, according to CNN.
“The health crisis deserves the government’s full attention, but the economic crisis will be worse and longer without aggressive action to confront it right now,” Dow said. “
The immediate future looks unpromising, according to CBRE Hotels Research’s revised 2020 hotels forecast. RevPAR is expected to decline 37 percent for the year with a 60 percent drop in the second quarter alone.
However, the news was not all bad, Jamie Lane, senior managing economist for CBRE and Econometric Advisors, said in “An Updated 2020 Outlook Expectations for the Year Ahead.”
“Governments throughout the world are implementing monetary and fiscal stimulus to try to prevent a more long-term global recession,” Lane said. “Our current expectations are that this stimulus, as well as pent up demand, will lead to a substantial rebound in economic activity in 2021.”
The forecast calls for a 38 percent rise in RevPAR in 2021 and a restoration to 2019 levels by 2022.