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2020 was the worst year ever for American hotels. Here’s what’s next: NPR



Hotel staff is ready to receive guests on June 4, 2020 at Caesars Palace in Las Vegas. US hotels consistently hit the lowest occupancy and revenue per capita. Available space last year.

David Becker / Getty Images


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David Becker / Getty Images

Hotel staff is ready to receive guests on June 4, 2020 at Caesars Palace in Las Vegas. US hotels consistently hit the lowest occupancy and revenue per capita. Available space last year.

David Becker / Getty Images

The U.S. hotel industry suffered its worst record year in 2020, when the coronavirus pandemic severely shrunk business travel and Americans gave up vacation to stay home.

Hotels hit lowest lowest time in occupancy and in turnover per. Available space last year, according to data provider STR.

With an occupancy rate of only 44%, the industry surpassed 1 billion unsold room nights for the first time in history, obscuring the 786 million sold during the 2009 global financial crisis.

And with a turnover per. Available space down almost 48%, the industry is expected to show almost zero profits in 2020 according to STR.

And by 2021, conditions will remain bad before they start to improve.

The first half of the year looks a lot like 2020, when Americans start lining up for vaccine shots, according to STR and the American Hotel & Lodging Association.

But in the second half of the year, the heightened demand for experiences could finally be released, strengthening the industry and giving a first glimpse of post-pandemic life – though not close enough to tear the industry out of turmoil.

“We, along with airlines and restaurants, were the first to be injured and the worst,” said Chip Rogers, president and CEO of AHLA. “Since most other companies are coming out of this, we’re still in pain for a while.”

There is room for hope. The insiders of the hotel industry are especially looking forward to the summer and expect a repeat from last year, when Americans finally jumped into their cars and drove, looking for a change of scenery and a break from Zoom calls.

Demand was strong as travelers took advantage of low hospitality rates and booked rooms at hotels and motels by the roads even past Labor Day, which traditionally marks the end of summer.

Still, increased leisure travel in the second half of the year will not save hotels from a harsh 2021, as business travel is expected to remain depressed.

Business travel accounts for 60% to 65% of all revenue in the industry, Rogers says.

Hotels in city centers with conference halls were among the hardest hit in 2020, when business conferences became virtual. A report from the AHLA says that business travel in 2021 will still be down by 85% compared to two years ago.

And overall, the hotel industry is strong for years of potential pain.

According to the AHLA, the journey will not return to the 2019 level until 2024.

But even that projection for recovery in 2024 comes with a star, because while the number of rooms sold may return, room rates will not return to the 2019 level until 2025, according to Jan Freitag, the national director of market analysis for hospitality at CoStar Group, who owns STR.

As harsh as the outlook looks, Freitag says the industry is trying to maintain hope.

“The story that hoteliers are telling themselves right now is that this could be the roaring 20s, that there is all this captured demand,” Freitag says.

“There is more money in banks waiting to be spent because we have already bought everything we need,” he adds. “What we could not do was have experience. Once the vaccinations are hit, it will allow us to experience again and the river gates open.”


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