STATE OF THE HOTEL INDUSTRY ANALYSIS: COVID-19 SIX MONTHS LATER - August 31, 2020
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STATE OF THE HOTEL INDUSTRY ANALYSIS: COVID-19 SIX MONTHS LATER August 31, 2020
REPORT: STATE OF THE HOTEL INDUSTRY ANALYSIS: COVID-19 SIX MONTHS LATER
Hotel Industry Remains On Brink of Collapse
Key Findings
When COVID-19 forced a virtual halt to the country, the economy and travel, the hotel industry was one of
the first industries affected. Unfortunately, it will also be one of the last to recover i. Even as travel has ticked
up slightly six months later, the hotel industry remains on the brink of collapse.
The following report outlines the current state of the industry in terms of employment, consumer travel
sentiment, occupancy, and industry trends in August 2020 compared to the immediate impact of the
pandemic in March and April 2020.
The report outlines five key issues facing the hotel industry today:
1. 4 Out of 10 Hotel Employees Are Still Not Workingii: At the peak of the pandemic, nearly
nine in ten hotels iii had to lay off or furlough workers, and the hospitality and leisure industry
lost 7.5M iv jobs. Despite small gains in employment in May and June driven largely by
restaurants and bars reopening, the leisure and hospitality sector is still down 4.3M jobs v since
February. The accommodations sector is left with a devastating unemployment rate of 38%vi
compared to the national average of 10.2%vii.
2. Almost 2/3 (65%) of Hotels Remain at or Below 50% Occupancy. That’s Below the
Threshold at Which Most Hotels Can Break-Even and Pay Debt viii: While leisure travelers
have increased average hotel occupancy since the historic low of 24.5%ix in April, thousands of
hotels are at risk of closure or are unable to hire back staff due to continuing, drastically low
hotel occupancy rates.
3. Consumer Travel Remains at All-Time Low: Only 33% x of Americans say they have traveled
overnight for leisure or vacation since March, and only 38% xi say they are likely to do so by the
end of the year.
4. Industry’s Leading Employers – Urban Hotels xii – Face Collapse with Cripplingly Low
Occupancies: Urban hotels are major employers due to their size. But these properties are
faring significantly worse than the national average, with an occupancy rate of just 38% xiii. Jobs
at urban hotels are unlikely to return without either a dramatic increase in occupancy – which
is unlikely – or additional Congressional action.
5. COVID’s Impact on Hotel Industry Felt in Major Cities Across The Country: COVID has left
hotels in major cities across the country struggling to stay in business, resulting in massive job
loss and dramatically reducing state and local tax revenue for 2020 xiv and beyond.
Hotels are central to getting our economy back on track and supporting millions of jobs across the country.
A full rebound in travel is years away, and Congressional support is urgently needed to bring our employees
back, keep our doors open and survive through this crisis. To learn more about AHLA’s “Roadmap to
Recovery” with recommended policy solutions, visit HERE or contact your elected official today.
2REPORT: STATE OF THE HOTEL INDUSTRY ANALYSIS: COVID-19 SIX MONTHS LATER
Five Key Issues Facing the Hotel Industry Today
1. 4 Out Of 10 Hotel Employees Are Still Not Workingxv
The COVID-19 crisis has had a devastating effect on our workforce. At the peak of the pandemic, nearly
nine in ten hotels xvi had to lay off or furlough workers, and the hospitality and leisure industry lost
7.5M xvii jobs.
Despite small gains in employment in May and June driven largely by restaurants and bars reopening,
the leisure and hospitality sector is still down 4.3M xviii jobs since February. The accommodations sector
is left with a devastating unemployment rate of 38% xix compared to the national average of 10.2% xx.
Additionally, only 37% xxi of hotels have been able to bring back at least half of their full-time
employees, while 36% xxii have been unable to bring back ANY furloughed or laid off staff.
With nearly half of direct hotel operations employees still laid off or furloughed xxiii, hotel workers are
losing more than $1.7 billion xxiv in earnings each week.
Leisure & Hospitality Jobs
(Source: Bureau of Labor Statistics)
2019 2020
18,000 16,496 16,473 16,494 16,507 16,519 16,526 16,528
16,000
14,000
Number of Jobs (in 000)
12,000
12,527
10,000 11,935
8,000 9,954
8,549
6,000
4,000
2,000
-
Jan Feb Mar Apr May Jun Jul
3REPORT: STATE OF THE HOTEL INDUSTRY ANALYSIS: COVID-19 SIX MONTHS LATER
2. Almost 2/3 (65%) of Hotels Remain At Or Below 50%
Occupancy. That’s Below The Threshold At Which Most
Hotels Can Break-Even And Pay Debtxxv
In April, 8 out of 10 hotel rooms xxvi were empty. In August, 5 out of 10 hotel rooms xxvii are still empty
with little expectations that occupancies will pick up until at least 2021. In fact, 65% xxviii of hotels are at
or below 50% occupancy, which is near the threshold at which most hotels can break-even with
expenses and pay for their debt. Thousands of hotels are at risk of closure, and their employees are
facing the possibility of permanent job loss.
Hotel Occupancy
(Source: STR. 2020 © CoStar Realty Information, Inc)
2019 2020
80.0% 73.6%
73.3% 71.4%
68.2% 67.8% 68.6% 67.4% 69.3%
70.0% 62.1% 61.8%
60.0% 54.7%
54.4%
62.2%
50.0% 55.1%
48.8%
40.0% 39.4% 47.0%
42.2%
30.0%
33.1%
20.0% 24.5%
10.0%
0.0%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
4REPORT: STATE OF THE HOTEL INDUSTRY ANALYSIS: COVID-19 SIX MONTHS LATER
3. Consumer Travel Remains At All-Time Low
While most hotels have reopened for business, many consumers have yet to resume traveling. A recent
survey found that only 33% xxix of Americans have traveled for leisure or vacation since March, and only
38% xxx say they are likely to do so by the end of the year. Usually 70% of Americans take a vacation in
any given year xxxi, suggesting that leisure travel is a long way from pre-COVID-19 levels.
Next Expected Hotel Stay
(Source: Morning Consult, Commissioned by AHLA)
None planned
6%
Aug
12%
Post Aug 2021
15%
Sep-Nov
21%
Jan-Aug 2021
28%
Nov-Jan
18%
5REPORT: STATE OF THE HOTEL INDUSTRY ANALYSIS: COVID-19 SIX MONTHS LATER
Many individuals are also hesitant to travel for upcoming holidays, exasperating already low hotel
occupancy levels. Currently, hotel reservations for the Labor Day holiday week are down 65% xxxii
compared to last year, with only 14%xxxiii of hotels being reserved for the holiday.
Percent of Hotel Rooms
Booked For Labor Day
Bookings Two Weeks Before Holiday
(Source: Amadeus Demand360® as of 8/21/2020)
2019 2020
41%
14%
2019 2020
Percent of Americans Traveling For Upcoming
Holidays:
(Source: Morning Consult, Commissioned by AHLA)
29%
25%
16%
Labor Day Thanksgiving Christmas
6REPORT: STATE OF THE HOTEL INDUSTRY ANALYSIS: COVID-19 SIX MONTHS LATER
4. Industry’s Leading Employers – Urban Hotelsxxxiv – Face
Collapse With Cripplingly Low Occupancies
Nationally, average hotel occupancy reached 50%xxxv in August, but hotels in urban markets and near
airports are facing cripplingly low occupancy rates of 38% xxxvi and 45% xxxvii, respectively. Including
hotels temporarily closed due to the pandemic, urban hotels’ room revenues were down 78%xxxviii in
July. Many of these hotels rely on groups, meetings, and business travelers, which are currently
nonexistent and unlikely to return until at least 2021. Meanwhile, vacationers are opting for drive-to
destinations, smaller markets, and beaches and other outdoor spaces.
As a result, occupancy has declined by 50%xxxix year over year at urban hotels, and by 40%xl at airport
hotels. Additionally, since urban hotels are major employers due to their size, jobs at urban hotels
are unlikely to return without either a dramatic increase in occupancy – which is unlikely – or
additional Congressional support.
Hotel Occupancy: April 12-18
(Source: STR. 2020 © CoStar Realty Information, Inc)
2019 2020
93% 85% 91% 95%
78% 79%
17% 27% 23% 26% 25%
13%
Hotel Occupancy: August 9-15
(Source: STR. 2020 © CoStar Realty Information, Inc)
2019 2020
89% 86% 83%
79% 71% 75%
52% 54% 58%
38% 45% 46%
7REPORT: STATE OF THE HOTEL INDUSTRY ANALYSIS: COVID-19 SIX MONTHS LATER
5. COVID’s Impact On Hotel Industry Felt In Major Cities
Across The Country
America’s hotels are an economic engine, powering communities across the country. Prior to this
pandemic, the hotel industry employed 1 in 25 American jobs xli – 8.3 million xlii in total. Hoteliers are
proud to be an integral part of communities in every Congressional district in America, contributing
$660 billion xliii annually to U.S. GDP and supporting nearly $395 billion xliv in wages, salaries, and other
compensation. Moreover, for every $100 hotel guests spend on lodging, another $222 is spent at the
destination—totaling $278 billion xlv per year spent on transportation, dining, shopping, etc. at U.S.
businesses during stays.
Yet, COVID-19 has left cities, especially urban markets, across the country struggling to stay in
business, resulting in massive job loss and dramatically reducing state and local tax revenue for 2020
and beyond.
In the 25 markets defined by STR as the largest hotel markets in the United States, the markets that
have been most negatively impacted by COVID-19 continue to see an average occupancy of 50%xlvi
less year over year.
Major Markets Most Negatively Impacted by COVID-19
(Source: STR. 2020 © CoStar Realty Information, Inc)
2019 2020
Oahu Island, HI 89
20
Orlando, FL 75
29
Boston, MA 87
32
Miami, FL 76
33
Minneapolis/St. Paul, MN 84
36
Chicago, IL 83
37
Seattle, WA 85
37
New York, NY 93
38
Anaheim/Santa Ana, CA 88
41
San Francisco/San Mateo, CA 91
43
Hotel Occupancy: August 9-15
8REPORT: STATE OF THE HOTEL INDUSTRY ANALYSIS: COVID-19 SIX MONTHS LATER
Among the top 25 largest hotel markets that have fared the best despite COVID-19, the markets
continue to see on average a 28% dropxlvii in occupancy compared with August 2019.
Major Markets Least Negatively Impacted by COVID-19
(Source: STR. 2020 © CoStar Realty Information, Inc)
2019 2020
Norfolk/Virginia Beach, VA 81
66
Philadelphia, PA 75
58
Detroit, MI 78
52
Atlanta, GA 69
50
Tampa/St. Petersburg, FL 68
49
Phoenix, AZ 66
43
Dallas, TX 66
41
St. Louis, MO-IL 71
39
Houston, TX 60
39
New Orleans, LA 61
32
Hotel Occupancy: August 9-15
9REPORT: STATE OF THE HOTEL INDUSTRY ANALYSIS: COVID-19 SIX MONTHS LATER
Report Methodology
AHLA’s state of the industry report was produced using publicly and privately available data and
polling from national and industry partners, including:
• Exclusive data from STR. 2020 © CoStar Realty Information, Inc
• Private polling conducted by AHLA among AHLA member companies
• Publicly available polling by Morning Consult, commissioned by AHLA
• Publicly available data from the Bureau of Labor Statistics
• Publicly and privately available data from Hotel Effectiveness
• Public data from OmniTrak (TNS)
• Private data from Amadeus Demand360® as of 8/21/2020.
For questions related to report methodology, please contact media@ahla.com.
i
“STR, TE Slightly Downgrade U.S. Hotel Forecast,” STR, 8/13/20.
ii “Industries at a Glance: Accommodation,” U.S. Bureau of Labor Statistics, 7/20.
iii AHLA member survey, AHLA, 7/20.
iv
“Industries at a Glance: Leisure and Hospitality,” U.S. Bureau of Labor Statistics, 7/20.
v “Industries at a Glance: Leisure and Hospitality,” U.S. Bureau of Labor Statistics, 7/20.
vi
“Industries at a Glance: Accommodation,” U.S. Bureau of Labor Statistics, 7/20.
vii “The Employment Situation – July 2020,” U.S. Bureau of Labor Statistics, 7/20.
viii “U.S. Hotel Profitability Picks Up Further In June, Full-Service properties Break Even At 50% Occupancy,” STR, 7/24/20.
ix
“STR: U.S. Hotel Performance for April 2020,” STR, 4/21/20.
x
“National Tracking Poll Commissioned by AHLA,” Morning Consult, 9/11/20-9/13/20.
xi
“National Tracking Poll Commissioned by AHLA,” Morning Consult, 9/11/20-9/13/20.
xii “Urban Hotels” are defined by STR as a “densely populated location in a large metropolitan area (e.g., Atlanta, Boston, San Francisco)”.
xiii
“U.S. Weekly Hotel Review: Industry Performance for the Week of August 2, 2020 – August 8, 2020,” STR, 8/11/20.
xiv
“Report: $16.8 Billion Loss In State, Local Tax Revenue From Hotels In 2020 Due To COVID-19,” AHLA, 6/18/20.
xv
“Industries at a Glance: Accommodation,” U.S. Bureau of Labor Statistics, 7/20.
xvi
AHLA member survey, AHLA, 7/20.
xvii “Industries at a Glance: Leisure and Hospitality,” U.S. Bureau of Labor Statistics, 7/20.
xviii “Industries at a Glance: Leisure and Hospitality,” U.S. Bureau of Labor Statistics, 7/20.
xix “Industries at a Glance: Accommodation,” U.S. Bureau of Labor Statistics, 7/20.
xx “The Employment Situation – July 2020,” U.S. Bureau of Labor Statistics, 7/20.
xxi
AHLA member survey, AHLA, 7/20.
xxii
AHLA member survey, AHLA, 7/20.
xxiii
“PerfectLabor Hotel Employment Index,” Hotel Effectiveness, 8/2/20.
xxiv
Reported by Hotel Effectiveness.
xxv
“U.S. Hotel Profitability Picks Up Further In June, Full-Service properties Break Even At 50% Occupancy,” STR, 7/24/20.
xxvi
STR. 2020 © CoStar Realty Information, Inc.
xxvii
STR. 2020 © CoStar Realty Information, Inc.
xxviii
“U.S. Hotel Profitability Picks Up Further In June, Full-Service properties Break Even At 50% Occupancy,” STR, 7/24/20.
xxix
“National Tracking Poll Commissioned by AHLA,” Morning Consult, 9/11/20-9/13/20.
xxx
“National Tracking Poll Commissioned by AHLA,” Morning Consult, 9/11/20-9/13/20.
xxxi
As reported by OmniTrak (TNS).
xxxii
Amadeus Demand360® as of 8/21/2020.
xxxiii
Amadeus Demand360® as of 8/21/2020.
xxxiv
“Urban Hotels” are defined by STR as a “densely populated location in a large metropolitan area (e.g., Atlanta, Boston, San Francisco)”.
xxxv
“U.S. Weekly Hotel Review: Industry Performance for the Week of August 2, 2020 – August 8, 2020,” STR, 8/11/20.
xxxvi
“U.S. Weekly Hotel Review: Industry Performance for the Week of August 2, 2020 – August 8, 2020,” STR, 8/11/20.
xxxvii
“U.S. Weekly Hotel Review: Industry Performance for the Week of August 2, 2020 – August 8, 2020,” STR, 8/11/20.
xxxviii STR. 2020 © CoStar Realty Information, Inc.
xxxix
“U.S. Weekly Hotel Review: Industry Performance for the Week of August 2, 2020 – August 8, 2020,” STR, 8/11/20.
xl
“U.S. Weekly Hotel Review: Industry Performance for the Week of August 2, 2020 – August 8, 2020,” STR, 8/11/20.
xli
“Hotel Industry Supports More Than 1 in 25 American Jobs,” AHLA, 9/9/19.
xlii
“Hotel Industry Supports More Than 1 in 25 American Jobs,” AHLA, 9/9/19.
xliii
“Hotel Industry Supports More Than 1 in 25 American Jobs,” AHLA, 9/9/19.
xliv
“Hotel Industry Supports More Than 1 in 25 American Jobs,” AHLA, 9/9/19.
xlv
“Hotel Industry Supports More Than 1 in 25 American Jobs,” AHLA, 9/9/19.
xlvi
“U.S. Weekly Hotel Review: Industry Performance for the Week of August 2, 2020 – August 8, 2020,” STR, 8/11/20.
xlvii
“U.S. Weekly Hotel Review: Industry Performance for the Week of August 2, 2020 – August 8, 2020,” STR, 8/11/20.
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