The week ending 21 March brought some new lows in U.S. hotel performance, and it’s likely the industry hasn’t yet reached the bottom.
HENDERSONVILLE, Tennessee—Record lows for weekly U.S. and Canada hotel performance are not likely to be records for long, according to STR analysts.
U.S. hotel revenue per available room dropped 69.5% during the week of 15-21 March—the third-consecutive double-digit weekly RevPAR decline. Jan Freitag, SVP of Lodging Insights at STR, said on a data webinar Thursday the RevPAR decrease was significant for all of the wrong reasons. (STR is the parent company of Hotel News Now.)
“That is the steepest weekly RevPAR decline we’ve ever recorded in our 30-year history,” Freitag said. “Unfortunately, we fully expect that this data could get even worse next week as travel into the U.S. and North America overall dwindles even further.”
Hotels in the U.S. sold 11.4 million rooms in the week, but Freitag said even that number is concerning.
“There were still 11 million rooms occupied, with at least 11 million travelers in them—which is half of what it was two weeks prior—but still there’s still 11 million rooms occupied with people who are likely traveling, and—I hope not—could be infectious,” Freitag said.
U.S. hotel performance is also not declining as quickly as it has in other countries affected by the coronavirus (COVID-19) pandemic, which might be viewed as a positive, but it also means that recovery is likely to take longer, Freitag said.
Freitag admitted his prior forecast that the U.S. could be eight weeks behind China might no longer be accurate.
“The U.S. hotel industry occupancy is not falling as quickly as it is in other countries, as it was in China, because there’s not a national federal lockdown on the (U.S.),” Freitag said. “What that further means is there are still a lot of people traveling, and there are still a lot of people that are not practicing social distancing, physical distancing. What that means further is that the uptick, the rebound will take us much, much longer as there are still so many more people who could get infected.”
Freitag added a rebound will take time once the health crisis has passed.
“Our data is going to get uncomfortable for a long time; it’s not going to be a v-shaped recovery, and you need to get comfortable with that,” he said.
During the week, absolute U.S. occupancy for the class segments was lowest in luxury and upper upscale—both 15.7%—while the economy class reported 43.3% occupancy.
“We have never reported a 15% occupancy for the week for anything, so when we look at the luxury and upper-upscale classes, (about) 16% of rooms were occupied, and that number goes up a little bit the further you go into the lower-end scales,” Freitag said. “It’s possible, though, that for the economy-class properties there are some rooms that are permanently occupied, where people just choose to live in them and get checked in and out month after month. So it’s possible there’s a long-term-stay aspect in the economy and midscale class data that might not change at all.”
Canada’s down week
RevPAR for Canada hotels plummeted 70.9% for the week of 15-21 March.
Freitag said none of Canada’s major markets were immune to low absolute occupancy and steep RevPAR declines, which he added is “the new normal that we’re dealing with.”
Click here for all STR data, webinars and presentations focused on COVID-19.