U.S. hotel occupancy is forecast to see a 29 percent decline in the next 12 months but will eventually level off by 2022, according to business strategy company Magid and consulting firm Horwath HTL.

THE COVID-19 PANDEMIC will cost U.S. hotels a 29 percent decline in annual hotel occupancy over the next 12 months, according to a study from business strategy company Magid and consulting firm Horwath HTL. This can lead to a $75 billion in room revenue.

Declines in business travel, projected to drop 22 percent this year, according to the Magid HTL Forecast Tracker, although leisure travel plans also are expected to decline. However, while fewer people plan to travel, those who do plan to travel with the same frequency.

Data in the tracker is gauged by baseline information gathered prior to March and measures the percentage of the population who plan at least one travel experience within the designated time frame as well as the anticipated number of experiences in the same time frames. Its purpose is to predict a return to pre-pandemic travel performance.

“The forecast shows the continuing significant impact COVID-19 is having on hotel occupancy,” said Rick Garlick, Magid’s vice president and strategy consultant. “Currently, the forecast suggests a 39 percent decline in occupancy for the next month. If the average occupancy at this time of the year (summer) is 70 percent, this would put current occupancy around 43 percent.”

Other findings in the tracker include:

  • 71 percent of consumers expect to next stay in a hotel 24 months from now, down from the baseline behavior of 89 percent who said so in March and the 74 percent in the beginning of June.
  • 56 percent of consumers said they expected to next stay in a hotel a year from now, compared to 62 percent who said so in June and 79 percent who reported the same in March.
  • Consumers anticipate staying at hotels 7.26 times per year, up from 6.74 times per year in June and the “baseline” reported behavior of 6.58 times per year.
  • Vacation rentals are forecast to drop 64 percent for the last part of the summer, but are expected to return to normal in 12 months.
  • Within the next 12 months, air travel is expected to decline 31 percent, in line with the expected 29 percent drop in hotel occupancy.

 

“Many hotel companies are creating new forecast models for the remainder of this year and next without the benefit of insight into the mindset of the traveling consumer,” said John Fareed, chairman for Horwath HTL America. “This data will allow hoteliers to better understand the customer’s intentions and create marketing offers to consumers that will position them to survive and thrive this crisis.”

Last week, STR reported that Labor Day weekend provided an expected boost to U.S. hotels’ occupancy for the week ending Sept. 5.  Occupancy for the week finished at 49.4 percent, up from 48.2 percent the previous week but down 18.9 percent year over year. ADR finished at $100.97, a 17.1 percent drop from the previous year, and RevPAR came in at $49.87, down 32.8 percent from last year.