CBRE - The recent surge in COVID-19 infections has dampened expectations for
According to the recently released Q3 2020 edition of
'The increased spread of the COVID-19 virus and reinstatement of government restrictions, combined with the lack of an economic stimulus package, has lowered our outlook for the performance of
CBRE's Q3 2020 forecasts call for a return to 2019 occupancy, average daily room rates (ADR), and RevPAR levels in 2024. In general, properties that operate in the lower-priced chain-scale segments will recover to 2019 performance levels sooner than the higher-priced hotels. One exception is luxury hotels. While occupancy levels in this category have declined significantly during 2020, luxury still has maintained some relative stability in room rates. It appears that leisure travelers who prefer luxury accommodations continue to have the means to pay the price premium.
The diverse impact of COVID-19 on different groups of travelers becomes evident when analyzing changes in lodging demand by chain scale:
Luxury and upper-upscale properties are most dependent on businesspeople and conventioneers and will see their demand levels decline in excess of 60 percent in 2020.
Conversely, hotels operating in the economy and midscale segments will see their business fall off by less than 25 percent.
'The confidence provided by an effective vaccine will serve to sustain the relatively strong leisure travel patterns observed during the summer of 2020, plus initiate a significant return of corporate travelers during the second half of 2021. Group demand, on the other hand, will lag in recovery because of the advance-booking nature of this segment,' Gallagher said.
The prospects for improvement in ADR during 2021 are influenced by these demand patterns. Overall, CBRE is forecasting a 1.3 percent decline in ADR for
Construction Activity
Further bolstering pricing power for
While revenue recovery may occur in 2024, some hotels may see their profits return to 2019 levels earlier, as US hotel operators have enacted effective cost control measures in 2020 to offset the severe declines in revenue, and will likely keep them in place for the foreseeable future.
The Q3 2020 edition of
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