CBRE: U.S. Hotel Occupancy Won’t Fully Recover Until Late 2022: Business Travel News

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After registering the steepest declines on record in 2020 during the pandemic, the U.S. lodging industry should turn around rapidly in 2021 and 2022, according to CBRE’s June Hotel Horizons report, with demand returning to pre-crisis levels in the third quarter of 2022.

In the meantime, the new report anticipates larger 2020 performance declines than did CBRE’s prior forecast in April, and a slower recovery in 2021, but better occupancy and revenue per available room returns in 2022.

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CBRE May 21

The company anticipates U.S. hotel occupancy to decline to 26.2 percent during the second quarter of 2020, with full-year occupancy of 41 percent. By segment, luxury hotels are projected to have the lowest 2020 occupancy at 33.4 percent, with the economy tier highest at 46.4 percent. 

The steep occupancy decrease, coupled with an anticipated 22.5 percent drop in average daily rate for the year, results in a projected year-over-year RevPAR decline of 51.9 percent for 2020. 

CBRE doesn’t anticipate RevPAR recovering to 2019 levels until 2023, with ADR lagging until 2024. Those indicators’ declines are expected to begin to lessen during the third quarter of 2020, with growth anticipated by the second quarter of 2021.

“Drive-to leisure destinations have been the first markets to show signs of recovery,” said Jamie Lane, senior director of CBRE Hotels Research. “When people can drive in their own car, and then go directly into their own room, they have a sense of control and safety. Hotels oriented toward group meetings will likely lag in recovery as meeting attendees get reacclimated to being close to large numbers of people.”

Reduction in the number of new Covid-19 cases will be a critical factor driving the lodging recovery. In the event of a prolonged need for social distancing and a persistent occurrence of new Covid-19 cases, CBRE has developed a forecast of a hypothetical downside scenario in which RevPAR recovery to pre-crisis levels is pushed out to 2025.

RELATED: CBRE: 2020 U.S. Hotel RevPAR Decline, Occupancy Worst Since 1930s

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