Thursday, March 12, 2020

Hotels: Occupancy Rate Decreased Sharply Year-over-year

by Calculated Risk on 3/12/2020 09:54:00 AM

From HotelNewsNow.com: STR: US hotel results for week ending 7 March

Reflecting concerns and cancellations around the COVID-19 outbreak, the U.S. hotel industry reported negative year-over-year results in the three key performance metrics during the week of 1-7 March 2020, according to data from STR.

In comparison with the week of 3-9 March 2019, the industry recorded the following:

Occupancy: -7.3% to 61.8%
• Average daily rate (ADR): -4.6% to US$126.01
• Revenue per available room (RevPAR): -11.6% to US$77.82

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

“The question over the last several weeks was ‘when’, not ‘if’ this impact would hit—well, when has arrived,” said Jan Freitag, STR’s senior VP of lodging insights. “Like so many other areas of the world, concerns around the coronavirus outbreak have now hit U.S. hotel occupancy hard. Not a surprise given the amount of event-related news we have seen, but group cancellations were felt across the markets and classes in addition to consistent declines in the transient segment. ADR is starting to decline as well, rapidly in the case of San Francisco. This is quite likely the beginning of a bad run that will get worse before it gets better.”
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 having a negative impact on occupancy. To date, this is the weakest start for a year since 2013 - and the seasonally important Spring travel season is just beginning.