Lodging demand in the US is predicted to return to pre-pandemic levels by the fourth quarter of 2023, according to lodging industry analysts CBRE. The forecast is based on better than expected results in the first quarter of 2021, plus positive economic and vaccination news.
However, due to a crowded lodging market, occupancy rates are not likely to recover until the fourth quarter of 2025. This is a somewhat more pessimistic outlook for occupancy than forecasts at the end of 2020, which had predicted a rebound by 2024.
The report finds that most properties that closed in 2020 are reopening in response to the accelerated growth in demand. At the same time, new build and renovated properties that had been scheduled to open in 2020 faced delays in construction and labor shortages, pushing their openings into this year. The result is a predicted increase of 2.1 percent in the number of hotel rooms available in 2021.
“We are encouraged by the pace of demand growth so far in 2021, not just for hotels, but for air travel, rental cars and alternative forms of lodging, as well,” said Rachael Rothman, head of hotels research and data analytics for CBRE. “Clearly there is a pent-up desire to get back on the road, especially for leisure travel.”
At the outset of the pandemic, industry analysts predicted that any recovery would be uneven, coming in fits and starts with some early winners and losers. For hotels, local market factors are driving performance in the current environment.
“In general, properties located in smaller, remote and resort markets suffered less and are poised to recover to pre-pandemic levels faster,” Rothman noted. “On the other hand, the larger, urban, gateway markets that are more dependent on in-bound international visitors and group demand will lag in recovery.”
In addition, even as leisure travel rebounds, other travel market segments are proving to be slower to regain momentum. “Anecdotally, we are seeing early signs of improvement in group travel, but the overall pace of the recovery in group travel and corporate travel is less certain at this point,” Rothman said.