Hotel Industry: 10/11-10/17
Hotel Weekly Review
Nationally, hotel occupancy was down 33.1% compared to 2019 this week. Atlanta was 3rd out of the 25 biggest lodging markets in the US for the least occupancy rate declines (-29.5%), up from last week’s ranking of 5th out of 25.
Nationally, hotel occupancy rates by location deteriorated in all areas compared to last week. The largest occupancy declines were urban (-56.7% YoY occupancy decline) and resort (-44.6% YoY occupancy decline) hotels declining by -7.1% and -7.4% respectively compared to last week. Suburban (-28.8% YoY occupancy decline) and airport (-41.7% YoY occupancy decline) hotels slightly declined by -1.9% and -1.2% respectively compared to last week. The best performing hotels in terms of occupancy declines, small metro/towns (-14.4% YoY occupancy decline) and interstate (-15.4% YoY occupancy decline) hotels, declined by -1.9% and -0.5% respectively compared to last week.
Source: STR
Week of October 11th Winners & Losers
For chain scale segments, all hotel segments declined significantly in terms of occupancy week over week. Economy hotels (-12% occupancy decline) saw occupancy rates decrease the least (-1%) compared to last week. Luxury (-69.2% occupancy decline) and upper-upscale (-63.9% occupancy decline) had the largest week over week declines with occupancy rates declining -7% and -5.5% respectively. Upscale (-39.8% occupancy decline) and independent (-28.5% occupancy decline) hotels faced week over week occupancy declines of -3.7% and -4.5%. Lastly, upper midscale (-26.9% occupancy decline) and midscale (-19.1% occupancy decline) declined by the same amount of -1.6% week over week.
The worst-performing hotel locations in terms of overall occupancy compared to last year are urban (35.2% occupancy), resort (40.8% occupancy), and airport (45.8% occupancy) hotels had occupancy declines of -56.7%, -44.6%, and -41.7% respectively compared to the same week last year.
The top-performing hotel market based on occupancy recovery, Norfolk/Virginia Beach (-19.1% occupancy decline this week compared to 2019), saw its fourth consecutive week of occupancy declines (-2.4%) compared to last week. The worst performing hotel markets, the northeastern city hotel market (New York City, Boston, Chicago), saw occupancy decline over 15% week over week. The worst performing market throughout COVID-19, Oahu Island, had an occupancy decline of 8.3% week over week.
Top 6 Performing Cities by change in occupancy
| City | 2020 Occ | 2019 Occ | YoY Change |
| Norfolk/Virginia Beach, VA | 53.7% | 66.4% | -19.1% |
| Tampa/St Petersburg, FL | 51.1% | 68.6% | -25.5% |
| Atlanta, GA | 51.8% | 73.5% | -29.5% |
| San Diego, CA | 52.8% | 76.8% | -31.2% |
| Houston, TX | 47.8% | 69.7% | -31.4% |
| Detroit, MI | 51.3% | 74.9% | -31.5% |
Worst 6 Performing Cities by change in occupancy
| City | 2020 Occ | 2019 Occ | YoY Change |
| Oahu Island, HI | 11.6% | 81.8% | -85.8% |
| New York, NY | 28.4% | 94.7% | -70.0% |
| San Francisco/San Mateo, CA | 31.4% | 88.0% | -64.3% |
| Orlando, FL | 29.7% | 80.5% | -63.2% |
| Chicago, IL | 33.2% | 84.0% | -60.5% |
| Washington, DC-MD-VA | 33.5% | 81.4% | -58.9% |
Source: STR
Hotel Industry Updates
The U.S. opened more hotels and rooms than any country between the beginning of March and the end of September, according to hotel pipeline data from STR. As of 1 October, the U.S. opened 521 hotels (55,395 rooms) over the seven-month period. Only 5 other countries have opened more than 2,000 rooms throughout COVID-19.
1. U.S. (55,395 rooms)
2. China (23,470 rooms)
3. Japan (16,304 rooms)
4. Germany (9,027 rooms)
5. Canada (2,748 rooms)
6. United Kingdom (2,481 rooms)
At the same time, the country has shown significant growth in project deferrals and abandonment. Year to date through September, 211 projects in the U.S. were deferred, which is a 56% increase over the same period last year. Additionally, 232 projects were abandoned, which was a 16% decrease over 2019.
Additionally, recent hotel trends have shown the use of online travel agencies (OTA’s) to book hotels has increased significantly. An Expedia Group study, in partnership with global research firm BVA BDRC, examined the contributions of online travel agencies (OTAs) to the US travel and tourism sector, the spending patterns of OTA travelers, and the role of OTAs in the hotel booking journey. The key findings can be found in the table below:
| Traveler Preferences | Traveler Behaviors |
| Travelers are 57% more likely to book their travel through an OTA now than before COVID-19 | Domestic OTA travelers spend 16% more per trip and 5% more on-property than direct bookers |
| More than two-thirds of travelers say value is the most important factor in booking decisions | Domestic OTA travelers stay nearly 5 nights, compared to just over 4 nights by direct bookers |
| Two out of three travelers use OTAs to plan or research their trip | Domestic OTA travelers are good for communities, spending 12% more on meals and drinks, 6% more on activities, and 27% more on car rentals |
Key Findings: OTA travelers have a higher propensity to spend more, stay for longer periods of time, and support local economies
- OTA travelers stay more nights compared to direct hotel bookers: Domestic OTA travelers, on average, stay ~5 nights, while direct bookers stay ~4 nights. International OTA travelers stay ~7.5 nights, compared to ~7 nights for hotel bookers.
- Domestic OTA travelers spent 16 percent more per trip than direct bookers: This comes despite the perception that OTA travelers are searching for cheaper rates (OTA travelers spend roughly the same amount as direct bookers on hotel room fees). Domestically, OTA travelers are more likely to book higher-end hotels, such as upper full service or luxury, than direct hotel bookers: 22% (OTA) vs 16% (direct bookers).
- Domestic OTA leisure travelers spend nearly 5 percent more on-property than hotel bookers: This includes amenities such as the hotel pool, hotel bar, gym, laundry services, restaurant, mini bar, and spa. International OTA business travelers spent 5% more on their total trip prior to the pandemic. All OTA business travelers, both international and domestic, spent 5% more on daily expenses.
- OTA travelers generate more economic stimulus for both destinations and the supporting communities: OTA travelers spend more on meals and drinks (+12%), activities (+6%), and car rentals (+27%). Domestic OTA travelers are active travelers, with shopping, visiting cultural attractions, and partaking in local cuisine.
Since OTA’s are mainly used by leisure travelers (and leisure travelers are the only group of travelers currently), hotels that are able to successfully negotiate deals with various online travel agencies will be able to grab more leisure travel market share to aide in their short term recoveries.
Atlanta Hotel Updates
For the first time since the COVID-19 pandemic began, the Domestic Travel Safety Barometer score rose above 50, indicating travelers are increasingly confident about the idea of traveling. According to a Travel Leaders Group survey of nearly 3,000 frequent travelers, US and Canadian travelers (99%) are eager to travel again, with 70 percent stating that they plan to take a holiday in 2021. Most of those surveyed who said they plan to take a holiday said they will fly to their next holiday destination (47%), 21% will drive, 17% said they plan to take an ocean cruise, with 5% opting for a river cruise. These travel trends aptly illustrate demand for leisure travel is primed for large increases. In order to capitalize on the large demand, airlines and hotels must have the capacity to take in all the travelers.
In the long term, Atlanta hotels continue to have a positive outlook. Large tech companies have created various campus’s to house future Atlanta tech jobs, investment firms (VC, PE, and asset managers) have increased their southeast presence due to the lower valuations in the south, and revitalization of the Midtown area has poised the city to bring in a large amount of leisure and business travelers into the city. Additionally, this week Atlanta won the bid to host the NCAA men’s basketball regional in 2025. In the short term, this week Atlanta hotels outperformed the national occupancy rate and RevPar hotel KPI’s along with staying in line with the national ADR level. Delta, whose hub is in Hartsfield-Jackson airport in Atlanta, announced that it has been seeing a higher volume of leisure travel in recent weeks. With most of Delta’s layovers and connections happening through Hartsfield-Jackson, Atlanta hotels are primed to gain an increase of occupancy from Delta’s recovery.
Atlanta events still active:
- Atlanta Celebrates Photography, October 1-31 2020
- Oktoberfest Atlanta, October 9-10 2020
- Festival on Ponce, October 10-11 2020
- Atlanta Horror Film Festival, October 15-17 2020
- Roswell Music’Fest, October 16-18 2020
Major Atlanta events that were cancelled/moved virtual:
- VIRTUAL FESTIVAL Atlanta Pride Festival, October 9-11 2020
- CANCELLED Monsterama, October 9-11 2020
- CANCELLED Chalktoberfest, October 10-11 2020
- VIRTUAL EVENT Taste of Atlanta, October 16-18 2020
- CANCELLED Brookhaven Arts Festival, October 17-18 2020
- POSTPONED TO SPRING Atlanta Kosher BBQ Festival, October 18 2020
- POSTPONED TO NOVEMBER PNC Atlanta 10 Miler & 5K, October 18 2020
Week Of October 11th Hotel Report: Good And Bad News
Good News
Atlanta wins bid to host NCAA men’s basketball regional in 2025
U.S. Leads in Hotel Openings During Pandemic
Q3 2020 Economic Outlook: Global Economy Heading for a Rebound
81% of North American Travelers Planning to Fly Domestically in Next Six Months
Bad News
Atlanta Falcons close facility amid positive case of Covid-19
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