Thursday, March 19, 2020

Hotels: Occupancy Rate Declined 24.4% Year-over-year

by Calculated Risk on 3/19/2020 10:43:00 AM

From HotelNewsNow.com: STR: US hotel results for week ending 14 March

Showing further COVID-19 impact, the U.S. hotel industry reported negative year-over-year results in the three key performance metrics during the week of 8-14 March 2020, according to data from STR.

In comparison with the week of 10-16 March 2019, the industry recorded the following:

Occupancy: -24.4% to 53.0%
• Average daily rate (ADR): -10.7% to US$120.30
• Revenue per available room (RevPAR): -32.5% to US$63.74

Performance declines were uniform across chain scales, classes and location types.

“To no surprise, the hurt continued and intensified for hotels around the country,” said Jan Freitag, STR’s senior VP of lodging insights. “The performance declines were especially pronounced in hotels that cater to meetings and group business, which is a reflection of the latest batch of event cancellations and government guidance to restrict the size of gatherings.

“The questions we are hearing the most right now are around how far occupancy will drop and how long this will last. Through comparative analysis of the occupancy trends in China and Italy over the past weeks, we can with certainty say that we are not yet close to the bottom in the U.S. However, the timeline for that decline and the eventual recovery are much tougher to predict because there is still so much uncertainty around the COVID-19 case numbers in the U.S. and how serious citizens are when practicing social distancing. China and Italy saw a more abrupt decline in occupancy because of stricter lockdowns. That will dictate the speed of recovery.”
emphasis added
The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Hotel Occupancy RateClick on graph for larger image.

The red line is for 2020, dash light blue is 2019, blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels).

2020 was off to a solid start, however, COVID-19 is now significantly impacting occupancy.

It is likely the four week average will drop below the 2009 average during the crisis.