Businesses based on people leaving their couches and spending money away from home – from cruise lines to restaurants to airlines – have suffered mightily during the global pandemic, but perhaps none more so than hotel companies.
A Bloomberg report, citing a hotel-industry market data firm called STR, now says that the U.S. hotel industry is approaching 1 billion empty rooms for the year, and many analysts believe federal stimulus money is urgently needed to avoid widespread business closures.
While empty rooms are an accepted industry reality, the 960 million unsold rooms through last week represent an increase of more than 46% over all of last year – by Christmas that’s expected to translate into 350 million more empty rooms.
“If there’s no relief before the holidays, I don’t know how many hotels will continue into 2021,” Bijal Patel, chairman of the California Hotel & Lodging Association, said in the Bloomberg story. “Many of us are going to be on the brink of shutting down.”
The story reported a 66% occupancy rate for this country’s 5.3 million hotel rooms in 2019, which was a very good year, as more than 650 million room nights went unsold.
Based on an average daily rate of $131, hotel owners have seen about $46 billion in lost revenue.
Unfortunately, even with vaccines on the way, the immediate future is far from sunny. STR forecasts that revenue per available room, which combines pricing and occupancy, won’t return to last year’s levels until 2024.
Amanda Hite, STR’s president and CEO, said in a November statement that the economic fallout won’t be overcome quickly, adding, “Business demand won’t return at a substantial level until caseloads are better contained, and in the meantime, recovery is going to be primarily driven by lower-tier hotels in the leisure-driven markets with outdoor offerings.”