The lodging industry is estimated to report a 50 percent, nearly $125 billion-dollar loss in 2020 making this year the worst year in history for the hotel industry, just the hotels and not travel overall.
NB: This is an article from Cayuga Consultants
Oxford also reported that this will equate to a total loss of $910 billion in travel related economic output in 2020. This is seven times the impact of 9/11. Will your hotel or favorite destination close? Odds are it will.
Subscribe to our weekly newsletter and stay up to date
The back page of the Hotel Business September 15th2020 edition magazine reported that “travel supports 15.8 million American jobs in total, employing 1 out of 10 Americans. 2019 travel generated $2.6 trillion for the U.S economy. The local impact is 70 percent to local communities (in traveler related spending) in transportation, food and beverage (retail). The failure of our (Nations) hotels can (and will) have a massive ripple effect on our country’s economy.” This is our new reality and needs to make headlines not the back page. Please share and encourage Congress to support the industry, before it’s too late.
In review…there is no doubt that March and April of 2020 presented some of the toughest times for the hospitality industry – EVER – affecting hotels, restaurants, OTA’s, travel consortia, airlines and cruise lines. Hit hard by the COVID-19 pandemic, the hospitality industry has been knocked down, but not out. Todays outlook is still grim as winter approaches despite travel peaks in many markets in the summer. The worst is still to come, unfortunately.
Fast Forward to today
“The Hospitality Asset Managers Association (“HAMA”) today released the results of its bi-annual survey of asset managers’ thoughts, experiences and forecasts for the upcoming year as the hotel industry continues to deal with the on-going pandemic.” There were more than 100 participants involved in the survey. “Based on our findings, while there is obvious optimism about a much quicker than expected recovery, a meaningful percentage of hoteliers still are working towards solutions. We are confident that better times are not too far ahead. Whether or not individual owners and properties will continue to survive and hopefully thrive remains to be seen.’” Said the HAMA President.
HAMA Survey findings show that:
- Nearly 30 percent of respondents are contemplating brand or management changes as part of their recovery strategy, approximately five percent believed they would change brands, ten percent foresaw changing management companies and roughly 15 percent believe they would change both.
- Approximately 15 percent of participants expected to either hand back keys to the lender or enter into a forced sale situation. Nearly 10 percent already had.
- Most HAMA members (50 percent) believe RevPAR will return to 2019 levels by 2023. Not quite ten percent believe it will occur as early as 2022, while approximately 37 percent believed it would happen in 2024. Predictions for 2025 and 2026 came in at three and one percent, respectively.
- The three factors most concerning to participants right now include labor availability (75 percent), demand (60 percent) and labor costs (55 percent).
- On average, in urban markets for full-service and luxury properties, nearly 45 percent of those surveyed anticipated acquisition price discounts of 11 to 20 percent. While one respondent believed discounts could reach 41 percent or more off pre-pandemic pricing, approximately 15 percent felt discounts would be as low as zero to eleven percent.”
HAMA members are involved in asset management, acquisition, financing and disposition of hotels and resorts and are directly responsible for making decisions concerning capital investments, renovations, asset repositioning, operational policies and management selection. Its U.S. members represent more than 3,500 hotels and resorts across every major brand, accounting for 775,000 hotel rooms, 250,000 employees, $40 billion in annual revenue and $3 billion in capital expenditures. The organization boasts an additional 245 international affiliate members, as well.
Grey Hospitality believes troubled assets will become readily available throughout this year with the lack of travel in the corporate and group segments. Leisure travel this summer will not sustain the total U.S inventory of supply and that coupled with no global tourism impact- the industry will continue to suffer.