A revised forecast, just released by data-analytics firm STR and insight group Tourism Economics, states out that, consumer demand for U.S. hotel products is projected to take until 2023 to fully recover to its pre-pandemic levels.
Although latest numbers have shown week-over-week occupancy levels improving over the past two months, this newest prediction came out despite the reported fact.
Jan Freitag, STR’s Senior Vice President of Lodging Insights in terms of occupancy, said, “Compared with our last forecast, we improved our demand projection for 2020 from -45.0 percent to -36.2 percent, but we expect it to take eleven quarters for the number of room nights sold to rise to the corresponding levels of 2019. Similarly, it will take until 2023 for occupancy to reach the 20-year historical average.”
He continued with this fact that, given decreased overall occupancy levels, and the expectation where hoteliers will discount their rates to compete for market share, average daily rate (ADR) could take longer to recover, even while normalizing progressively each quarter.
Freitag cleared that STR’s revised ADR 2021 projections rose to 5.2 percent from the 1.7 percent year-over-year growth listed in the prior forecast. What he meant was that despite a better growth rate next year, hoteliers do not see ADR recovering to pre-2020 levels in the next five years.
According to Freitag, the good news is that demand and occupancy continue to rise slowly each week, and while slow, recovery should continue, provided the country avoids significant setbacks in its progress against the coronavirus.
Even though the outlook for the remainder of 2020 seems to have slightly bettered its situation, the pace of recovery throughout 2021 appears likely to be slower than experts had formerly anticipated. The prior forecast estimated a year-over-year RevPAR decline of 57.5 percent in 2020 and an expected growth of 48 percent in 2021. The updated forecast predicts slower growth in 2021 (down 50.6 percent year-over-year), but also less growth during 2021 (40.6 percent).
Tourism Economics’ president, Adam Sacks has stated that “The worst is behind us and recent performance has shown travel activity is picking up tentatively. Though COVID-19 will remain a defining factor through the first quarter of 2021, the outlook anticipates further gains in travel as confidence will be gradually restored and restrictions will ease soon.”