STR: Week ending June 27 showed mixed recovery results

Recent spikes in COVID-19 have not yet affected RevPAR

Leisure travel to drive-to markets continued to improve in the week ending June 27, according to STR’s deep dive on its data for the week. However, a recent spike in COVID-19 cases in several states threatens to stall out RevPAR recovery, Jan Freitag, STR’s senior vice president of lodging insights in a video.

U.S. HOTELS SAW the same glimpses of recovery from the pandemic-generated economic downturn during the week ending June 27 that have appeared over the past two months. A recent spike in COVID-19 cases may threaten that progress, however, according to STR’s deep dive for that week’s data.

Weekend occupancy reached 54.1 percent for the closing of the week, according to STR, down 56.5 percent from last year. With an average occupancy of 53.7 percent, economy class hotels continue to endure the crisis best, followed by midscale hotels with 50.1 percent occupancy.

“This is the first time since March that RevPAR was better than minus 60 percent, so we continue to see an upswing in that metric,” said Jan Freitag, STR’s senior vice president of lodging insights in a video.

Drive-to markets that had done well in the previous weekend continued to grow their occupancy, Freitag said. Occupancy rose between the weekend of June 19-20 and June 26-27 in several markets that benefit from leisure drive-to demand, including Gatlinburg and Pigeon Forge, Tennessee; Fort Walton Beach, Florida; Coastal Carolina, North Carolina; Mobile, Alabama; Virginia Beach, Virginia; and Bend/ Redmond, Oregon.

“That’s a very, very strong indicator that the leisure demand is very healthy across the U.S.,” he said.

Occupancy in larger markets also continued to grow since the trough during the week of April 11, in some cases doubling.

“There are some healthy indicators, but there are also some indicators that give us pause, notably the uptick in the COVID-19 cases last week,” Freitag said. “Almost 250,000 new COVID-19 cases were reported.”

For now, RevPAR numbers continue to move up on a weekly basis.

“It’s going to be interesting to see if the uptick in COVID-19 cases will actually make the RevPAR recovery stall out,” he said.

Freitag also discussed the question of when demand will return to 2019 levels on a market level. Dallas, Seattle and Nashville will meet and maybe exceed 2019 levels by 2023, he said, but New Orleans, Detroit and Oahu will not reach it even by 2024.

The number of room closures globally and in the U.S. were going down, he said.

“Even at the height of the closures, the U.S. never saw more than 20 percent of reported rooms close, and furthermore, we fully expect that the majority of them, the vast majority of temporarily closed properties will reopen by the fall,” Freitag said. “These closures were temporary and most of the hotels will reopen.”

In closing, Freitag said, the last full week of June was mixed and the future remains uncertain.

“We clearly have results that point either to a recovery or to a slowing in the recovery. We will see how it turns out,” he said. “We will pay very close attention to the July 4 weekend.”