Kalibri Labs Predicts Lodging Recovery Slowdown for Rest of 2021
Citing sluggish group and business demand, weakening leisure demand and the spread of the Covid-19 delta variant, Kalibri Labs now projects a recovery slowdown for the remainder of 2021, according to a company report released Wednesday.
Both airline bookings and hotel demand dropped off in July compared with June, according to Kalibri’s “Mind the Gap” report, and the company anticipates this will continue after schools return to in-classroom learning. Although demand and average daily rate trends the second half of the third quarter and fourth quarter historically have been characterized by strong group and business travel, most large groups won’t return in a meaningful way until 2022, resulting in occupancy and ADR pressure on large urban hotels, according to Kalibri. Further, the resurgence of Covid-19 cases is likely to delay many companies’ plans to return employees to the office.
The report also showed that leisure demand—which for Kalibri includes social, military, educational, religious and fraternal groups—has been gaining on non-leisure demand, which Kalibri labels commercial, since 2015, not just over the course of the pandemic.
“On balance, commercial demand slightly outpaced leisure demand on an annualized basis in every year since 2015, although slightly declining each year,” according to the report. In 2019, “53 percent of all demand was commercial and 47 percent was leisure. Through July 2021, that ratio has shifted to over 63 percent leisure and just under 37 percent commercial.” Kalibri expects the relationship to stay relatively consistent through the remainder of 2021.
In addition, while leisure demand has approached or exceeded 2019 levels in recent months, “commercial demand is not only well below pre-pandemic levels, but has only recovered to about 80 percent of 2015 levels.”
Not surprisingly, weekend demand has been a driving force in the recovery, representing leisure travelers. This trend, however, moderated in July when weekend room night demand dipped from June to July. Other than December 2020, this was the first time since May 2020 that weekend room night demand did not outperform shoulder days (Thursday and Sunday) or weekdays. Still, for July, hotels reported Saturday had the strongest ADR change compared with 2019, followed by Friday, then Sunday. Wednesday continued to be the weakest day of the week from a recovery standpoint.
Donna M. Airoldi https://www.businesstravelnews.com/