New Report Reveals the Current State of the Hotel Industry

A new report from the American Hotel & Lodging Association (AHLA) predicts that 2022 will see the hotel industry continue on a path toward recovery from COVID-19’s disastrous impact, but that the road ahead is sure to be bumpy and somewhat unstable.

AHLA’s newly released ‘2022 State of the Hotel Industry Report’, produced in collaboration with Accenture, based its findings on data and projections provided by both Oxford Economics and STR. Full recovery for the hotel sector is thought to be a few years off yet, with forecasts pointing to 2025.

Still, the outlook for the year ahead is trending positively, with hotel occupancy rates and revenue per available room (RevPAR) expected to approach 2019 levels. The prospects for ancillary revenue, such as from meeting space and food-and-beverage sales, are looking less promising.

U.S. hotels collectively lost $111.8 billion in RevPAR alone over the past two years.

As was also the case in 2021, leisure travel is destined to drive the sector’s recovery, while business travel is expected to stay down by more than 20 percent of its pre-pandemic volume. In 2019, business travelers constituted 52.5 percent of the industry’s overall room revenue, but it’s anticipated to represent just 43.6 percent in 2022.

Traveler segments are evolving, reflecting ongoing shifts in consumer and business sentiment and influencing the way hotels operate. Bleisure travel—mixing leisure time into business trips, or vice versa—represents one such trend that’s risen rapidly, due to the increase in remote working prompted by COVID-19.

AHLA reported one study indicated that 89 percent of global business travelers wanted to incorporate a personal vacation into their business trips in the upcoming year.

“Hotels have faced enormous challenges over the past two years, and we are still a long way from full recovery. The uncertainty about the Omicron variant suggests just how difficult it will be to predict travel readiness in 2022, adding to the challenges hotels are already facing,” commented Chip Rogers, president and CEO of AHLA. “The slow return of business travel and fewer meetings and events continue to have a significant negative impact on our industry. The growth of leisure and bleisure travel represents a shift for our industry, and hotels will continue evolving to meet the needs of these ‘new’ travelers.”

In this era of the “new traveler”, it is prophesied that technology will play a crucial role in hotels’ degree of success and that properties will need to invest in new in-house and guest-facing technologic solutions to satisfy the changing needs and preferences of today’s consumers.

“Travel and hospitality brands still face an uncertain marketplace, but all these changes also herald a new era of opportunity to drive long-term customer loyalty. They should flex with demand and respond to the added complexities and volatility in travel by delivering a ‘travel partner’ mentality to their leisure and business customers,” said Liselotte De Maar, managing director in Accenture’s travel industry. “Travelers are now not only focused on price and quality of a location, but also on cleanliness and sustainability values and impact, and expect a clearer, more digital service. Companies will need to continue to digitally transform, reinvent their loyalty model, as well as rethink the employee proposition, if they wish to thrive.”