The Small Space Marketplace

List Your Space

Find Space

Home About Us Executive Subscriber Membership RENTV Conferences Newsletter Contact Us Advertise
February 29, 2024
 Search RENTV
 The REview
News Home Page
Southern California
Northern California
Pacific Northwest
Prop. Management
Press Releases
 R. E. Marketplace
Service Providers
Property Spotlight
 RENTV  Conferences
Subscriber Login:
Forgot Password?

Printer-friendly Version   Email an Associate
Nation’s Hotels Expected to See Full Demand Recovery by Late 2022


This report was provided by real estate services firm CBRE

After suffering the greatest performance declines in the history of the U.S. lodging industry during 2020, the nation’s hotels will benefit from what is expected to be a relatively rapid economic turnaround in 2021 and 2022, according to the June 2020 edition of CBRE’s Hotel Horizons forecast report.

CBRE foresees demand for U.S. lodging accommodations returning to pre-crisis levels in the third quarter of 2022. However, a lag in ADR (average daily rate) growth will stall the recovery in RevPAR (revenue per available room) until 2023.

“The U.S. lodging sector has been hit by two headwinds in 2020: a contraction in overall economic activity and the need for social distancing,” said Jamie Lane, Senior Director of CBRE Hotels Research. “Accordingly, our current forecast calls for a 37 percent reduction in the number of room nights occupied in 2020 compared to 2019. There is some comfort knowing that travelers will be back on the road in full force within two years.”

Hotel occupancy levels across all hotel categories in the San Diego region are projected to drop to 44.7 percent in 2020, a year-over-year decline of 41.7 percentage points, but show a modest recover in 2021 to 62.6 percent. SD occupancy this year compares with 41 percent nationwide.

Consistent with prior recessions, the severe declines in demand have sapped pricing. ADR in the San Diego region is expected to drop 31.1 percent to $114.80 this year but inch up again 11.3 percent to $127.72 in 2021. Likewise, RevPAR is expected to drop 59.8 percent to $51.29 in 2020 but is likely to jump 55.80 percent to $78.89 in 2021.

“The San Diego and Southern California region is a very popular lodging and hospitality market especially with leisure travelers,” said Brandon Feighner, managing director of CBRE Hotels’ Advisory, based in Los Angeles. “We have sensed and are now beginning to see pent-up demand from people who are eager to get out of the house and enjoy a little time away.”

He added, “Therefore, we have seen drive-to leisure destinations show some healthy pick-up in demand. By driving themselves directly to their destination, visitors can cut out a lot of potentially unsafe touch points, which provides a sense of control. Hotels and hotel brands are doubling down on safety and cleanliness initiatives by eliminating buffets, strongly encouraging social distancing and instituting expanded housekeeping protocols.”

The Turnaround

“Although the trough in 2020 lodging performance will be much deeper than anything we’ve seen in the past 80 years, much of this decline is not caused by underlying fundamental economic problems,“ said Bram Gallagher, Senior Economist with CBRE Hotels Research. “Once social gathering restrictions are lifted, an expected return to the strong underlying economic conditions that existed before 2020 will restore economic production.”

A critical factor driving the lodging recovery is a reduction in the number of new COVID-19 cases. 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 the recovery in RevPAR to pre-crisis levels is pushed out to 2025.

While the demand for U.S. lodging is forecasted to return to pre-crisis levels in the third quarter of 2022, the national ADR is not expected to recover on a nominal basis until the third quarter of 2023. However, even by 2023, less than half of the 60 markets in CBRE’s Hotel Horizons universe are expected to have achieved an ADR recovery.

“The resiliency of owners and operators will be tested this year, and government and financial assistance will be required,” Lane said. “However, I believe the industry will be pleased with the pace of the recovery when we perform our retrospective analysis in the years to come.”

Return to the Archive page




Home | About Us | Newsletter | Contact Us | Executive Subscriber Membership | Executive Subscriber Home | Advertise
Southern California | Northern California | Pacific Northwest | Southwest | Retail | Multifamily | Financing | Property Management
Archives | Press Releases | Service Providers | JobWorks | Property Listings

Copyright © 2024 by RENTV, All Rights Reserved
Website designed by Regency Web Services, Inc. and powered by Lightning Media