U.S. lodging demand will not return to pre-pandemic levels until the fourth quarter of 2023, according to a new data forecast by CBRE Hotels Research, a division of CBRE Group, Inc. (NYSE: CBRE).
What To Expect: CBRE is predicting the average daily rate (ADR) for U.S. hotels will return to 2019 nominal levels by the first quarter of 2024, trailing the recovery for lodging demand by one quarter.
U.S. hoteliers experienced a 22.5% ADR decline during 2020 due to the pandemic, and CBRE is projecting a 4.3% increase in ADR for 2021 and an 11.4% increase for 2022.
However, CBRE also observed that occupancy gains will be hampered because fewer lodging development and conversion projects were sidelined by the pandemic than previously forecasted. As a result, recovery in occupancy may not occur as far off as the fourth quarter of 2025.
“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.
“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.”
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It Could Be Worse: While the U.S. lodging industry has its challenges, they are nowhere as severe as the chaos facing their Japanese counterparts.
According to a Bloomberg report, the Japanese lodging sector spent $14 billion to improve facilities ahead of the Tokyo Olympics, but the prohibition against foreign travelers followed by the decision to keep the sports events absent of spectators has created a financial disaster for this sector.
Last year saw a 57% increase in Japanese hotel bankruptcies, the highest level since 2011, according to data from Tokyo Shoko Research. The occupancy rates for member hotels at the Japan Hotel Association are below 30%; prior to the pandemic, the occupancy rate was around 80%. The lodging sector has also complained about the absence of financial assistance from the Japanese government.
“Bars and restaurants are also in terrible trouble, but at least they’re getting some compensation from the government,” said Makiko Furusato, who runs an independently owned Tokyo hotel. “The spotlight just isn’t focused on our industry.”
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