Implementation of COVID-19 vaccines will bring higher rates and occupancies >>
by: Harvey Chipkin
PwC is forecasting a more accelerated recovery for the lodging industry than it did in its last report at the end of 2020 because of the rapid implementation of COVID-19 vaccines. The consultancy currently expects annual occupancy for US hotels this year to increase to 57.2%, and average daily rates (ADR) to increase by 8%, with resultant revenue per available room (RevPAR) up 40.1% from last year. RevPAR is expected to finish 2021 at approximately 74% of pre-pandemic levels. Despite increasing vaccinations and consumer optimism, lodging’s recovery is expected to remain uneven. Destinations reliant on leisure demand are expected to experience increasingly strong performance through the summer; however, with the approach of Labor Day and as companies’ back-to-office plans evolve, some markets are expected to fall off of summer highs. Destinations historically reliant on individual business, group and international demand may continue experiencing near-term weakness as companies evaluate travel policies and countries assess cross-border travel risk. In 2022, PwC forecasts the vast majority of temporarily closed hotels will likely have reopened and demand growth will continue to improve as the economy strengthens. Occupancy and ADR will see continued growth, resulting in a year-over-year RevPAR rebound of 15.2% -- or reaching approximately 85% of pre-pandemic levels. Challenges to the outlook, said PwC, continue to include effectiveness of the national vaccination campaign, severity of virus mutations and corresponding vaccination efficacy against those mutations and the speed at which the economy recovers.
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