STR: U.S. hotels see fourth week of double-digit RevPAR losses

However, this may be the ‘end of the beginning’ of the crisis, expert said in webinar

After four weeks of plummeting RevPAR, including an 80.3 percent plunge in the week ending on March 28, Jan Freitag, STR’s senior vice president of lodging insights said the industry is in for a “long, slow road” for the near future. However, there will be a recovery, he said.

REVPAR FOR U.S. hotels dropped 80.3 percent in the last week of March, according to STR, the fourth week in a row of losses resulting from the COVID-19 pandemic. It’s the steepest decline the research company has ever recorded, but it may be close to the bottom of the drop stemming from the crisis.

During the same week, STR previously reported, occupancy dropped 67.5 percent to 22.6 percent, ADR went down 39.4 percent to $79.92 and RevPAR declined 80.3 percent to $18.05.

In its weekly webinar for the U.S. and Canada markets on April 2, STR and Tourism Economics were projecting a 50.6 percent RevPAR decline in 2020 in the U.S. Those losses are due to a 42.6 percent decline in occupancy that followed a 51.2 percent drop in demand.

Room supply also is forecast to decline 14.9 percent this year due to hotel closures in the country, but at the same time GDP is forecast to grow in 2021 and create an 81.8 percent room demand increase that will push occupancy up 57.3 percent.

There were 8.5 million room nights sold in the U.S. during the week, less than half of the 23.1 million rooms sold during the week ending March 7.

“I’ve said this sentence three weeks in a row: It is hard to fathom that the data is going to get a lot worse going forward,” Jan Freitag, STR’s senior vice president of lodging insights, said during the webinar. “What I’m not saying is this is the bottom and we are now in the recovery. What I’m saying is that this is going to be a long, slow road, with these double digit, 80 to 90 percent RevPAR declines, going forward for the near future.”

U.S. extended stay hotels saw occupancy levels at 40.5 percent during the last week of March while luxury hotels in Canada saw a 94.9 percent RevPAR decline for the week compared with the same week last year.

“Maybe there’s some, not good news but maybe not as bad news,” Freitag said.

Regarding the month of losses, he quoted Winston Churchill saying “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

“Now we are in the trough. We’re going to be here for a while, but the beginning is over, the beginning was all of March,” he said. “We are now at the end of that beginning and this, too, shall pass and we’ll get better.”

On another positive note, Freitag said, consumer surveys show that, while more people plan to travel less in the next 12 months than in the previous 12 months, a significant number do say they plan to travel more in next 12 months. Also, the Chinese hotel market is seeing some recovery in occupancy four months after the beginning of the outbreak there.

“There is, indeed, life after COVID-19 for the Chinese hotel industry, just at there will be for the American hotel industry.”