Hotel Industry: 9/27-10/03

Hotel Weekly Review

Nationally, hotel occupancy was down 26.3% compared to 2019 this week. Atlanta was 6th out of the 25 biggest lodging markets in the US for the least occupancy rate declines (-35.2%), down from last week’s ranking of 2nd out of 25.

Nationally, hotel occupancy rates by location increased compared to last week. Despite large occupancy declines, urban (-50.1% YoY occupancy decline) and resort (-38.6% YoY occupancy decline) hotels recovered the most out of all hotel locations by 7.1% and 6.5% respectively compared to last week. Suburban (-26.2% YoY occupancy decline) and airport (-39.7% YoY occupancy decline) hotels recovered by the same amount, 3.4%, compared to last week. The best performing hotels in terms of occupancy declines, small metro/towns (-14.4% YoY occupancy decline) and interstate (-15% YoY occupancy decline) hotels, recovered by 1.7% and 1.1% compared to last week.

Week of September 27th Winners & Losers

For chain scale segments, economy and midscale hotels continue to have the fastest recovery, having occupancy declines of -10% and -17.7% respectively. Upscale (-36.9% occupancy), upper-upscale (-60.2% occupancy), and luxury (-64.2% occupancy) hotels recovered occupancy rates by ~2% compared to last week. Luxury hotels, although having -64.2% drops in occupancy rates, had only a -14.6% drop in ADR (3rd out of the 7 chain scale segments)– indicating a continually increasing pricing ability for luxury hotels despite large room demand declines.

The worst-performing hotel locations in terms of overall occupancy compared to last year are urban (37.3% occupancy), resort (40.8% occupancy), and airport (43.8% occupancy) hotels had occupancy declines of -50.7%, -38.6%, and -39.7% respectively compared to the same week last year.

The top-performing hotel market based on occupancy recovery, Norfolk/Virginia Beach (-16.1% occupancy decline this week compared to 2019), saw its second consecutive week of occupancy declines (-1.1%) compared to last week. In contrast, the worst-performing hotel markets, Oahu Island and northeastern cities, saw around a 5% occupancy recovery compared to last week.

Top 6 Performing Cities by change in occupancy

City	2020 Occ	2019 Occ	% Change
Norfolk/Virginia Beach, VA	52.50%	62.50%	-16.10%
Phoenix, AZ	48.60%	64.80%	-25.00%
Tampa/St Petersburg, FL	47.00%	64.40%	-27.00%
Detroit, MI	49.50%	70.20%	-29.60%
San Diego, CA	52.10%	74.30%	-29.90%
Atlanta, GA	49.20%	71.40%	-31.20%

Worst 6 Performing Cities by change in occupancy

City	2020 Occ	2019 Occ	% Change
Oahu Island, HI	19.00%	81.90%	-76.80%
Orlando, FL	30.80%	70.30%	-56.10%
New York, NY	38.40%	87.10%	-55.90%
Boston, MA	35.00%	78.50%	-55.50%
Chicago, IL	34.40%	71.00%	-51.50%
San Francisco/San Mateo, CA	41.70%	85.30%	-51.10%

Source: STR

Atlanta Hotel Updates

After outperforming all hotel KPI’s last week, Atlanta hotel’s saw large ~10% declines in all its KPI’s this week. Several components are attributed to these declines. Last year, this week consisted of a variety of business/entertainment conventions, the Georgia State Fair, college/professional sports games, and a high volume of concerts. With COVID-19, all these events have been canceled. Additionally, artificial occupancy increases created from contracts between hotels and universities to house COVID-19 infected students ended at the beginning of this week. For Georgia Tech, contracts with Hotel Indigo and the Ritz-Carlton were not renewed and students are now being quarantined in their own on-campus dorm rooms if they contract COVID-19.

In Atlanta, this week the Omni Hotel CNN is extending nearly 500 furloughs citing no end to the pandemic’s economic impact. This announcement comes after hundreds of jobs have been lost at lodging destinations such as the Grand Hyatt Atlanta in Buckhead, the Atlanta Marriott Buckhead, and the Four Seasons Hotel Atlanta in Midtown.

On a positive note, Altitude Acquisition Corp. is raising $300 million to buy travel, travel technology, and travel-related businesses that have been disrupted by the COVID-19. With lower valuations and hotels in need of cash to maintain operations, Altitude may be able to help Atlanta hotels by integrating new technology into their operations. Additionally, high-rise development in Atlanta continues to rise. Developers building these new high-rises are creating new business models by integrating residential, retail, office, and hotel components in each building to propel a suburban neighborhood like atmosphere for each building. The Ardent Cos. has a high-rise project set for a nearly one-acre property at Lenox and East Paces Ferry; Mill Creek Residential purchased 3.8 acres for $15.7 million to build a 21-story apartment tower, expanding its Modera Prominence project on the Buckhead Loop; and Varden Capital Properties is redeveloping the 16-story Darlington Apartments in south Buckhead.

Atlanta events still active:

• DRIVE THROUGH Atlanta Greek Festival, September 25-27 2020
• IN PLACE EVENT East Atlanta Strut, September 26 2020
• Sweet Auburn Music Fest, September 26-27 2020
• Sandy Springs Artspalooza, September 26-27 2020

Major Atlanta events that were cancelled/moved virtual:

• CANCELLED North Georgia State Fair, September 24 – October 4 2020
• VIRTUAL FESTIVAL Out On Film, September 24 – October 4 2020
• MOVED ONLINE Atlanta BeltLine Lantern Parade, September 26 2020
• VIRTUAL FESTIVAL AJC Decatur Book Festival, September 4 – October 4 2020
• VIRTUAL FESTIVAL Atlanta Black Theatre Festival, September 30 – October 3 2020

Week Of September 27th Hotel Report: Good And Bad News

Good News

High-rise development continues to increase in Atlanta

Atlanta ‘blank check’ company raising $300M to buy travel businesses disrupted by Covid-19

Georgia business and civic leaders launch Georgia Support the Vote

Allen Morris Co., Clarion Partners, buy prime West Midtown development sites

Bad News

Omni Hotel extends furloughs citing ‘length and severity’ of pandemic

Lawsuit: Midtown hotel management knew sex trafficking was going on