2021 US Hotel Forecast Improves Amid Demand Surge, Rising Room Rates
STR and Tourism Economics recently upgraded their U.S. hotel forecast for 2021 amid a surge in demand and soaring room rates.
The companies lessened growth projections for 2022, however, as business travel remains down and is unlikely to propel the industry as summer leisure demand drops off. Currently, 2021 U.S. hotel occupancy is projected at 54.7 percent, 1.4 percentage points higher compared to the previous forecast released in May. Meanwhile, 2021 average daily rate (ADR) is forecast at $115.50, which is up from $109.47. Lastly, revenue per available room or RevPAR is projected at $63.16, up from $58.39.
STR and Tourism Economics continue to anticipate a full recovery of demand by 2023 and expect RevPAR to surpass 2019 pre-pandemic levels at some point in 2024.
“Rather than improved expectations for the coming months, our upward revision for 2021 more reflects the surge in demand that has already occurred as well as room rates hitting an all-time high on a nominal basis,” STR president Amanda Hite said in a statement accompanying the latest projections, which were released at the 13th Annual Hotel Data Conference last week.
“As we have maintained, there is concern once the summer officially wraps up and the industry loses what has been its primary demand source. In normal years, summer leisure demand would be supplanted by business travel and large corporate events, but with more concern around the Delta variant as well as delays in companies returning their employees to offices, it’s possible that businesses wait until early 2022 to put their people back on the road. Even though we expect some of that demand to shift into 2022, we brought our projections down in comparison with a stronger-than-expected 2021. Overall, our full recovery projections remain similar with 2023 into 2024 as the ‘finish line,'” Hite added.
“In the meantime, recovery is uneven with some leisure-driven markets ahead of where they were pre-pandemic and most of the major markets still well off the pace. Add in staffing challenges in a lot of markets and the situation is still quite difficult for a lot of the country even though there is optimism for the years ahead.”
Aran Ryan, Tourism Economics director said that “though it is challenging to look through the current virus wave, we expect as public health conditions stabilize, the recovery in leisure travel demand will remain intact and the corporate travel recovery will resume its climb later this year.”