Summer sun brings signs of recovery for hotel sector

Good news for the rebounding hotel sector: Hotel occupancy surged to 71.0% during the week ending July 17, according to a new Market Recovery Monitor report from STR.

The ongoing impact of COVID-19 over the hospitality industry remains evident, with that figure down 8.7% from the corresponding week in 2019, before the pandemic greatly skewed hotel performance metrics. Still, that 71.0% occupancy rate marks the highest share of filled rooms since Columbus Day weekend of October that year, offering hope that pandemic-related struggles for hotels are firmly in the rearview.

And that wasn’t the only positive figure in STR’s report. More than one-fifth of all hotels that reported data had occupancy above 90%, the highest share at or above that threshold since summer 2019. Weekend occupancy exceeded 80% for just the second time all year, following the 2021 high-water mark of 82% set during the week ending June 26.

Average daily rate (ADR) in July has been especially promising, with the week ending July 10 seeing an ADR of $139.84 and the week ending July 17 seeing an ADR of $139.19 — the two highest average daily rates of all time.

July’s encouraging results followed a strong June, which was somewhat expected given the easing of restrictions nationwide and an American consumer base itching to leave their homes and enjoy some summer recreation. Compared to the pre-pandemic level of June 2019, occupancy (-9.8%) and ADR (4.0%) remained relatively weak, but occupancy for the month rose to 66.1% from 59.3% in May, and ADR, at $129.00, was the highest for any month since February 2020.

While the recovery appears to be in full swing, concerns do remain moving forward. Chief among them is the ongoing swell of the COVID-19 Delta variant, which has the potential to curb business travel — and consequently, corporate group demand — in the fall. While the summer saw a bounce-back of luxury and family travelers, business travel has yet to pick up, resulting in a recovery so far where the most and least expensive facilities have seen progress while the mid-priced and upper mid-priced tiers have lagged.

“Luxury hotels today are charging $40 more than they charged two years ago,” explained Jan Freitag, senior vice president of lodging insights at STR. “For economy-type properties, the ADR increase is around $3. But the lack of corporate transient [activity] is clearly visible in the upper upscale hotels, which are still $13 cheaper than they were in 2019.”


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