Vaccinations and economic stimulus speed up recovery for U.S. Hotels
Salt Lake City – May 4, 2021 – The continued rollout of COVID-19 vaccinations and additional stimulus funds have strengthened the foundation for the recovery of the U.S. lodging industry. According to the February 2021 edition of Hotel Horizons®, CBRE Hotels Research is forecasting an average national occupancy level of 43.0 percent during the first half of 2021, accelerating to 55.1 percent in the second half of the year.
For the hotels in the Salt Lake City MSA, occupancy is forecast to average 52 percent in 2021, an increase of 9.5 percent over 2020. This still is well below the market’s pre-pandemic occupancy in 2019 of 70.9 percent, but it marks the beginning of a recovery in the sector.
“The quicker-than-anticipated national rollout of COVID-19 vaccines coupled with the December COVID Relief Bill have improved the outlook for the U.S. hotels market. We expect hotels and drive-to destination resort areas catering to leisure travelers to continue to see the fastest gains in occupancy. We anticipate business travel to pick up in the latter half of the year, benefitting urban and suburban upper-priced properties,” said Julie Purnell, executive vice president, CBRE Hotels Advisory.
The Salt Lake City MSA’s average daily room rate (ADR) is expected to average $84.11 this year, an increase of 1.9 percent from 2020. Resulting RevPAR is expected to grow to $43.70 by year-end 2021, an increase of 11.6 percent from the close of 2020. The Salt Lake City MSA hotel market is projected to be nearly fully recovered in 2023, with an expected ADR of $106.10, just 2.8 percent less than the ADR achieved in 2019.
“Based on our forecasts, the worst of the top-line declines are now behind us. We are beginning to see green shoots of a recovery in air travel data, booking patterns, and revenue per available room (RevPAR),” said Rachael Rothman, head of Hotels Research & Data Analytics for CBRE.
Growth Beyond 2021
One factor supporting enhanced lodging performance in the second half of this year and beyond is a reduction in the traditional lodging supply. The combination of permanent closures and fewer projects starting construction has resulted in a reduction of CBRE’s national hotel supply forecast for 2021 to a gain of just 0.9 percent for the year. The Salt Lake City MSA hotel supply is forecasted to grow 2 percent in 2021. CBRE estimates national supply growth will remain below 1 percent through 2023.
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The Q4 2020 edition of Hotel Horizons® for the U.S. lodging industry and 65 major markets can be purchased by visiting: https://pip.cbrehotels.com.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2020 revenue). The company has more than 100,000 employees serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.