Path to Recovery for the Hotel Industry

The hotel industry has been hardest hit by recent events as fewer people are traveling and hotels are under requirements to limit occupancy. Recovery in the hotel industry from changes that have been introduced to minimize risk and spread of COVID-19 will take some time, but there is hope.

Some Hotels Have Continued to Perform

Not all hotel properties have been affected at the same level as the pandemic has unfolded. Brands that focus on economy options have managed to remain viable. This indicates that people are traveling and looking for hotel options, yet are minimizing the amount they pay. The hardest hit properties are the upper end and luxury market that has seen an 70% reduction in occupancy this year. The end of summer did bring a slight increase across all properties as families traveled, yet there is another downward trend in Fall, a time when hotels cater to business travelers, conferences, and sports events, all of which are still under restrictions.

When Will Hotels Start to Recover?

As with every other industry, hotels may need to wait for recovery until most people are vaccinated against COVID-19. Traveling is very safe right now, but many people choose to stay home to avoid any unnecessary exposure and risk. Once people are vaccinated, it may take another three to four years for the hotel industry to recover at pre-COVID levels.

Locals are Helping the Hotel Industry

One trend that is helping the hotel industry fare the COVID-19 pandemic is that more locals are driving to destinations. While the levels do not completely make up for the normal levels that typically include flight travelers, these locals are helping the hotel industry at least stay hopeful and optimistic. Larger chains remain closed, though, due to the lack of occupants during the pandemic.

Market Shifts in the Hotel Industry

Whenever recovery in the hotel industry does occur, people should expect some shifts. Small and medium-size properties may close permanently and be replaced with larger properties that have funding to weather the COVID-19 storm. Much of the success of smaller properties depends on the funding structure prior to the pandemic, as well as how much support is available through special programs and other revenue streams. Another change in the industry is that there may be an increase in acquisitions and mergers, especially among properties with proven track records.