COVID-19 continues to have a dramatic and wide-sweeping impact on the global hospitality industry. We will continue to report the Smith Travel Research (STR) findings weekly.
In comparison with the week of 24-30 March 2019, the industry recorded the following:
- Occupancy: -67.5% to 22.6%
- Average daily rate (ADR): -39.4% to US$79.92
- Revenue per available room (RevPAR): -80.3% to US$18.05
“Year-over-year declines of this magnitude will, unfortunately, be the ‘new normal’ until the number of new COVID-19 cases slows significantly,” said Jan Freitag, STR’s senior VP of lodging insights.
“Occupancy continues to fall to unprecedented lows, with more than 75% of rooms empty around the nation last week. As projected in our U.S. forecast revision, 2020 will be the worst year on record for occupancy. We do, however, expect the industry to begin to recover once the economy reignites and travel resumes,” said Freitag.
Aggregate data for the Top 25 Markets showed steeper declines across the metrics: occupancy (-74.5% to 19.6%), ADR (-43.9% to US$89.71) and RevPAR (-85.7% to US$17.60).
There is a direct correlation between RevPAR declines and the increase in COVID-19 reported cases. The chart below from STR illustrates this dynamic.
New Orleans, Louisiana, recorded the steepest decline in RevPAR (-92.8% to US$10.27), due primarily to the second-largest decreases in occupancy (-84.9% to 12.7%) and ADR (-52.3% to US$80.74).
Oahu Island, Hawaii, experienced the steepest drop in occupancy (-86.4% to 10.5%).
Miami/Hialeah, Florida, posted the largest decline in ADR (-57.9% to US$116.64).
Of note, occupancy in New York, New York, was down 81.8% to 15.2%. In Seattle, Washington, occupancy dropped 76.6% to 18.5%.
Historically, RevPAR growth has been directly correlated with GDP growth. Granted there are conditions that break this strong correlation such as a spike in supply, but for the past 4 decades, hotels have consistently shown that their performance is a leading economic indicator. So, if the recovery is a “V”, “U”, or an “L” recovery, our industry will likely reflect very similar results.
While these are challenging times for the service industry and our economy as a whole, we believe being armed with the data will help as our clients and industry colleagues are faced with difficult decisions. We will continue to monitor the statistics reported by Smith Travel Research (STR) as well as other meaningful information on the state of the hotel and service industry in the weeks to come.