Hotel Industry: 11/01-11/07

Hotel Weekly Review

Nationally, hotel occupancy was down 35.9% compared to 2019 this week. Atlanta was 2nd out of the 25 biggest lodging markets in the US for the least occupancy rate declines (-32.5%), holding steady from last week’s ranking of 2nd out of 25.

Nationally, hotel occupancy rates by location deteriorated in all areas compared to last week. The largest overall occupancy declines were urban (-31.7% YoY occupancy decline) and resort (-50.4% YoY occupancy decline) hotels declining by -0.9% and -3.2% respectively compared to last week. Suburban (-28.8% YoY occupancy decline) and airport (-41.7% YoY occupancy decline) hotels slightly declined by -6.2% and -3.2% respectively compared to last week. The best performing hotels in terms of overall occupancy declines, small metro/towns (-16.9% YoY occupancy decline) and interstate (-17.7% YoY occupancy decline) hotels, declined by -4.2% and -5.3% respectively compared to last week.

Source: STR

Week of November 1st Winners & Losers

For chain scale segments, all hotels experienced week over week declines in occupancy as well as significant overall YoY declines. Upper-midscale and upscale hotels declined by -31.4% and -43.8% compared to last year as well as having the highest week over week declines at -6.3% and -5.9%. Midscale and independent hotels declined by -20.1% and -31% compared to last year and had a similar week over week declines at -4.1% and -4.2% respectively. Upper-upscale and economy hotels declined by -64.8% and -10.2% compared to last year and had significantly lower week over week occupancy declines at -1.1% and -2.1% respectively. The hotel with the highest overall year over year occupancy drop compared to the same week in 2019, luxury hotels (down -71.4%), had the smallest week over week occupancy decline at -0.5%.

The worst-performing hotel locations in terms of overall occupancy compared to last year are urban (34.6% occupancy), resort (36.2% occupancy), and airport (44.8% occupancy) hotels had occupancy declines of -56.5%, -50.4%, and -42.7% respectively compared to the same week last year.

The top-performing hotel market based on occupancy recovery, Norfolk/Virginia Beach (-21.8% occupancy decline this week compared to 2019), saw its first occupancy decline of -4.1% compared to last week after recovering 1.5% last week following five prior weeks of occupancy declines. The worst performing hotel market, the northeastern city hotel market (New York City, Boston, Chicago), saw occupancy recover ~5% week over week. The worst performing market throughout COVID-19, Oahu Island, had a week over week occupancy recovery of 10.8%.

Top 6 Performing Cities by change in occupancy

City	2020 Occ	2019 Occ	% Change
Norfolk/Virginia Beach, VA	49.4%	63.1%	-21.8%
Atlanta, GA	49.0%	72.7%	-32.5%
New Orleans, LA	53.9%	80.3%	-32.9%
Tampa/St Petersburg, FL	48.6%	72.9%	-33.4%
Detroit, MI	43.9%	66.8%	-34.3%
Phoenix, AZ	55.1%	84.7%	-35.0%

Worst 6 Performing Cities by change in occupancy

City	2020 Occ	2019 Occ	% Change
Oahu Island, HI	24.0%	84.5%	-71.6%
Orlando, FL	31.9%	86.4%	-63.1%
Boston, MA	30.3%	79.1%	-61.7%
New York, NY	36.0%	92.6%	-61.1%
San Francisco/San Mateo, CA	35.7%	85.9%	-58.4%
Chicago, IL	30.1%	70.8%	-57.4%

Source: STR

Atlanta Hotel Updates

Atlanta hotels suffered from another week of lost conventions and tourist inflows into the city. Anime Weekend Atlanta, a 4-day convention held annually at the Cobb Galleria, and Renaissance Waverly Hotel, has recorded in bringing in 30,000 attendants each year. The Atlanta DocuFest hosted in Synchronicity Theatre and which showcases and gives out awards to various top international documentaries was also canceled this week. The expected guest inflow of this event was expected to reach 4,000. With various large conferences in Atlanta continually being canceled due to COVID-19, occupancy dropped -32.5% compared to the same week last year as well as experiencing a -12% occupancy decline compared to last week. Despite the large occupancy drop, Atlanta was able to outperform the US average in occupancy by 3.4% and RevPar by 1.2%.

Investment in Atlanta hotels, however, continues to rise as Pellerin Real Estate purchased the former Ramada Plaza by Wyndham Atlanta Downtown & Conference Center, a 375-room hotel in south Atlanta’s Summerhill neighborhood. Atlanta banks on the other hand continue to deal with loan losses despite significant drops in deferrals, partially due to exposure in the travel, lodging, and restaurant space.

• Ameris Bank, the largest bank headquartered in Atlanta, set aside an additional $18 million in reserves for potential loan losses, compared to $88 million in the second quarter. Non-performing assets increased to $163 million in the third quarter or 0.82% of the total portfolio, with about 4% of hotel loans considered non-performing as of Sept. 30. 
• Atlantic Capital Bank set aside $636,000 in provisions for loan losses in the third quarter, following the addition of $8.2 million in the second quarter. 
• Synovus also had a small percentage of loans in deferral by the end of the third quarter. While the bank provided payment relief to about 15% of its loan portfolio in May, just $337 million in loans, or less than 1% of the portfolio, remained in deferral status on Sept. 30. More than 40% of those loans were hotel or restaurant deferrals. 
• United Community Bank added $21.8 million in provisions for credit losses, increasing the allowance for loan losses to about $146 million, or 1.39% of total loans, excluding Paycheck Protection Program loans. Loans on a deferred payment schedule amounted to $365 million, or about 3% of the bank’s portfolio, as of Sept. 30. This figure is down significantly from the 16% of loans in deferral at the end of the second quarter.

Atlanta events still active:

• NEW VENUE PNC Atlanta 10 Miler & 5K, November 1, 2020
• Chastain Park Arts Festival, November 7-8 2020
• Food-O-Rama, November 8, 2020

Major Atlanta events that were cancelled/moved virtual:

• CANCELLED Anime Weekend Atlanta, October 29 – November 1, 2020
• CANCELLED Atlanta DocuFest, November 5-7 2020
• CANCELLED Atlanta Zombie Pub Crawl, November 7, 2020

Week Of November 1st Hotel Report: Good And Bad News

Good News

Trilith Studios new movie industry ground in Fayetteville set to build a 120 room hotel

Pellerin Purchases 375-Room Hotel in South Atlanta’s Summerhill District

Bad News

COVID-19 cases cause cancellation of Georgia soccer game

Despite significant drops in deferrals, Georgia banks still preparing for loan losses