The Effects of COVID-19 on the U.S. Travel & Hospitality Industry

Social distancing and self-quarantine are being highly encouraged by hospitality organizations to ensure staff & customer safety during the COVID19 pandemic. With the situation worsening in the US for the time being, the travel & hospitality sectors are the most severely affected. 

However, since the hospitality business was the first to feel the crunch coming from COVID19 lockdowns and travel bans, they were developing proper contingency plans before many others. With the impact of the COVID19 pandemic still unpredictable, hospitality companies are constantly involved with minimizing the operation and financial fallout. The disruption in hospitality leading to closures of hotels, restaurants, cinemas, bars & lounges, etc. not to forget the complete ban on travel has delivered a cataclysmic shock to the industry.  


A Message from Marriott International President & CEO Arne Sorenson (Courtesy of AHLA)

It is a pleasure to see that the hospitality sector is working together with authorities & organizations to help out with alleviating stress on the entire US infrastructure. For instance, hotels are actively accommodating COVID19 patients & medical personnel to alleviate the pressure on hospitals, in addition to providing segregated treatment rooms.  

In their 17th March news release, the World Economic Forum identified that almost 50 million hospitality workers would be unemployed due to the pandemic. This alarming number from the World Travel and Tourism Council comes with the warning that the industry may take up to 10 months to recover. 

STR Reports Concerning Performance Amid COVID19 Pandemic 

Marketing & business research firm STR released the latest hospitality performance numbers from the US industry in their 8th April report. 

STR reports that a “significant” year over year decline was observed in the three major performance metrics of the US hotel industry. Compared with the previous one, during the week from 31 March to 6 April, the industry recorded the following metrics 

  • Occupancy: -68.5% to 21.6%
  • Average daily rate (ADR): -41.5% to US$76.51
  • Revenue per available room (RevPAR): -81.6% to US$16.50

Jan Freitag, senior VP of lodging insights for STR, discusses in his video report that:

“Data worsened a bit from last week, and certain patterns were extended around occupancy,” … 

“Economy hotels continued to run the highest occupancy, while interstate and suburban properties once again posted the top occupancy rates among location types. 

This shows there are still pockets of demand while more than 75% of the rooms around the country are empty. We don’t expect any material change in the magnitude of RevPAR declines for the time being.”

Watch Jan Freitag’s 3rd April video report here.

A Swift Recovery

While there is unfortunate news everywhere with predictions and forecasts being revised, there is great hope among hospitality professionals. Several hoteliers & hospitality professionals are expecting a phenomenal recovery by global hospitality businesses.  

Pebblebrook Hotel Trust CEO Jon Bortz talked to Skift Magazine commenting:

“It’s going to be a long road to recovery for the hotel industry.” He also outlined a roadmap for the industry’s survival mode to complete recovery. He went on to say that “increased coronavirus testing, a vaccine, and additional federal aid are key steps needed to get struggling hoteliers to the other side of the ongoing downturn in travel.”

“We think it’s more likely an L-shaped or angled-L [recovery] with an opportunity to escalate with treatments or testing or a vaccine, which I don’t think is until next year,” … “There is potential for a hockey stick-shaped recovery if there is a vaccine and it works.”

Data & analytics firm, GlobalData, also predicts a swift recovery from the COVID19 pandemic. Travel and tourism analyst at GlobalData, Ralph Hollister, commented for Travel Pulse:

“It is imperative that hotels across the globe remember how they have overcome a range of past crises, such as natural disasters, the SARS outbreak and acts of terrorism when thinking through their strategies to handle the COVID-19 crisis,” … “As the impact of COVID-19 lessens and demand increases, it is crucial that hotels act in a proactive manner by effectively managing room rates and marketing offers to maximize revenues.”

“Hotels that are the fastest to drop their room rates and who provide the heaviest discounts will often be the last ones to recover when demand eventually returns. Many hotels will not be able to return to their normal rates instantly after the demand for travel returns.”

In their latest survey hospitality business think tank, The Lodging Industry Investment Council established that the hotel industry should “recover from the drop in business caused by the virus, but no sooner than in six months…”

Conclusion 

We bid farewell with this edition of our blog. 

Wishing everyone the best of health and our heartiest appreciation for all the medical personnel fighting the COVID19 threat. 

For more interesting news, stats, trends, and opinions visit us again. Until next time, see you again soon. 

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