Maybe it’s the reports of the US hospitality industry experiencing 51% unemployment clouding my judgment, but I’m just not sure I buy the forecast of a full demand recovery for the US hotel industry by late 2022 in this week’s Top Story.
Why? Glad you asked.
First, here is the 2019 baseline for US hotel occupancy:
Occ% – 66.1%
ADR – $131.21
RevPAR – $86.76
For 2020, CBRE is forecasting:
Occ% – 41.0%
ADR – $101.67
RevPAR – $41.67
And for 2022, CBRE predicts:
Occ% – 65.0%
ADR – $122.93
RevPAR – $79.95
Now, let’s recall that following 9/11, the lowest 12-month moving average for occupancy percentage was 58.5%. It took 3 years for 12-month moving average of US Occ% to recover 5 points to 63.5%.
Following the global financial crisis, there was a four year span for ADRs to return to pre-disruption levels.
Look, I sincerely hope they are right. I REALLY do. But I just don’t see any evidence of a massive rebound that accelerates at a much faster rate than the last two.
Perhaps most telling is one paragraph inserted in the lower section of the article that reads:
“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 precrisis levels is pushed out to 2025.”
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