Citing “hampered plans” for group and business travel this fall because of the Covid-19 delta variant spread, CBRE Hotels Research has tempered its U.S. lodging market performance forecast for the fourth quarter of 2021 and into 2022, the company announced.
“The delta variant and increasing number of Covid infections led to delays in ‘return to office’ plans at many firms and coincided with the start of the 2022 travel-budgeting season,” said CBRE head of hotel research and data analytics Rachael Rothman in a statement. “Unfortunately for business-centric hotels, the rebound in business travel expected in September of 2021 is now delayed and will likely have a ripple effect into 2022’s corporate travel budgets.”
CBRE now projects that U.S. hotels will reach an annual occupancy level of 54 percent by the end of 2021 with an average daily rate of $112.85. Full-year 2021 revenue per available room is forecast as $60.91, which is 42 percent greater than the RevPAR value recorded in 2020, but still about 29 percent less than that reported for 2019.
These projected raw numbers actually are higher than what CBRE released in its previous forecast in July 2021, but that is because the actual metrics for the three months of the summer leisure season were “so much stronger than anticipated” that they “more than offset the reduction” in the remaining months, according to Rothman in an email message.
For 2022, CBRE projects a year-over-year occupancy gain of 8 percent, a 7.1 percent lift in ADR and a 15.6 percent increase in RevPAR.
CBRE noted that the delta variant “is having a negative impact on 2022 corporate travel budgets,” based on anecdotal conversations. Demand for meeting-related travel may lag that of previous years, but it also could “provide a near-term benefit to markets with lower operating costs, warmer weather and less restrictive health regulations,” according to the company.
“In general, Sun Belt cities and drive-to leisure destinations are expected to perform the best, while group-oriented hotels, northern markets and global gateway cities reliant on inbound international travel are projected to lag in performance,” said CBRE Hotels Research senior hotel economist Bram Gallagher in a statement. “The pace of recovery for business and group demand is top of mind for most hoteliers.”
CBRE: Rate to Lead U.S. Hotel RevPAR Recovery as Occupancy Lags