CBRE Again Softens U.S. Lodging Recovery Forecast

After the U.S. lodging industry during the second quarter faced its worst occupancy since the 1930s and its worst revenues and profits ever, the sector is poised for a multiyear recovery to begin this quarter, according to the latest forecast report by CBRE Hotels Research. However, the company now believes the recovery will take longer than it previously anticipated, with occupancy projected to reach 65.5 percent in 2023, as opposed to 2022, which it had predicted nearly two months ago.

“Economic, social and operational factors influence demand recovery,” said CBRE senior economist Bram Gallagher. “In the past quarter we observed geographically staggered rates of infection throughout the U.S. Therefore, CBRE forecasts an economic cycle shallower than initially anticipated, followed by a longer recovery.”

[Report continues below chart.]

Corporate travel and group demand also are key to fall performance. Revenue from March through June from bookings through global distribution systems—which usually comes from business travelers—and group channels as a percentage of total industrywide revenue declined from typical levels. And revenue booked through GDSs and group channels historically is at its highest point during September, October and November as a share of industrywide revenue, explained CBRE director of research information services Robert Mandelbaum in an email.

“It can be assumed that corporate and group travel accounted for much less of a [percentage] of total lodging demand during the first half of 2020 compared to history,” according to Mandelbaum. “If the trend of the first half of 2020 persists through the second half, this does not bode well for the industry, particularly the luxury and upper-upscale properties which are most dependent on corporate and group demand.”

The report further shows that recovery patterns vary by chain scale, with occupied room nights for hotels in the upper-midscale segment projected to return to 2019 levels in 2022, while luxury and upper-upscale demand will lag until 2024.

RELATED: CBRE: Recent Covid-19 Case Increase Tempers U.S. Hotel Outlook

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One thought on “CBRE Again Softens U.S. Lodging Recovery Forecast

  • September 7, 2020 at 1:40 am

    Like!! Really appreciate you sharing this blog post.Really thank you! Keep writing.


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