Hotel Industry: 9/13-9/19
Hotel Weekly Review
Nationally, hotel occupancy was down 31.9% compared to 2019 this week. Atlanta was 6th out of the 25 biggest lodging markets in the US for the least occupancy rate declines (-31.3%), up from last week’s ranking of 7th out of 25.
Across the board, occupancy rates continue to slowly recover across different locations except urban hotels (down 80bps). Small metros/towns (54.3%), interstate (53.2%), and suburban (51.1%) hotels were able to achieve above 50% occupancy for the 2nd week in a row. Small metro and interstate hotels had less than 20% occupancy declines. Urban (36.7% occupancy), resort (41.9%), and airport (45.3%) hotels had occupancy declines of -53.3%, -38.5%, and -42% respectively compared to the same week last year.
Week of September 13th Winners & Losers
For chain scale segments, economy and midscale hotels continue to have the fastest recovery. As occupancy rates reach near zero percent declines for these hotels, room prices (ADR) are expected to reach pre-pandemic levels. Upscale (-40% occupancy), upper-upscale (-62.5% occupancy), and luxury (-66.8% occupancy) hotels will continue to suffer due to COVID-19 halting business travel and luxury Airbnb’s taking market share of high-end guest stays. In the short term, luxury hotels, despite larger occupancy drops, will have an advantage over upper-upscale hotels in terms of pricing due to the high-quality service offerings and reward programs luxury hotels have in place.
In terms of location, urban hotels continue to post over 50% occupancy declines. With college football and the NFL season underway with limited to no attendance in stadiums as well as businesses continuing to have work online, urban hotels will continue to post large deficits in all their KPI’s.
After the spike in travel and hotel demand from Labor Day weekend, all hotel markets experienced declines in their occupancy. The best performing hotel market, Norfolk/Virginia Beach (-15% occupancy decline this week compared to 2019), saw an ~3% occupancy decline compared to last week. In the United States, island and northeastern cities market has the largest occupancy declines while southern and midwest cities have the smallest occupancy declines.
Top 6 Performing Cities by change in occupancy
|Cities||2020 Occ||2019 Occ||% Change|
|Norfolk/Virginia Beach, VA||56.40%||66.40%||-15.00%|
|Tampa/St Petersburg, FL||45.60%||63.00%||-27.60%|
|New Orleans, LA||48.10%||67.70%||-29.00%|
Worst 6 Performing Cities by change in occupancy
|Cities||2020 Occ||2019 Occ||% Change|
|Oahu Island, HI||19.70%||88.30%||-77.70%|
|New York, NY||36.50%||92.10%||-60.30%|
|Minneapolis/St Paul, MN-WI||37.40%||84.00%||-55.50%|
Atlanta Hotel Updates
This week college football and NFL games kicked off. On Sunday, September 13th, Falcons played in Mercedes Benz, and on Saturday, September 20th, Georgia Tech played in Bobby Dodd stadium. The Falcons and Atlanta United announced they will not allow fans to sit in Mercedes-Benz stadium for all of September (2 games for Falcons and 3 Atlanta United games). Hotel occupancy last year during home games would help prop up Atlanta’s hotel occupancy to above 80% as well as driving up room prices. College football, however, will allow fans to sit in the stadium– which increased Friday and Saturday Atlanta hotel occupancy by 2x the current weekly average. In a report by the GWCC, the stadium’s impact on the Atlanta economy is:
- Total economic output increase of $1.77 billion;
- $590.9 million in additional labor income;
- 18,293 in added jobs;
- $98.8 million in additional state tax and fee revenue;
- $72.6 million in additional tax revenues for local governments; and
- Total out‐of‐state attendance of over 1.2 million people generating almost 3.0 million out‐of‐state visitor days.
Although Atlanta was above the national average for occupancy rate, the market was below average in ADR and RevPar. With a lower consumer appetite to travel to cities along with fewer opportunities available in cities (business travel, sports games, conventions) due to COVID-19, hotels in Atlanta have to drop prices in order to achieve higher occupancy levels. In the long run, Atlanta hotels will need sports stadiums and conventions to be reopened to attain sustainable profitability.