Cleveland market still well-positioned after COVID-19

Coming into 2020, the United States hotel industry was ready to build on the record-setting performances of the past few years.

In 2019, revenue per available room and average daily rate reached the highest levels ever tracked by STR. While some experts warned of oversaturation with the number of new properties built in recent years, nobody could have predicted the current state of the industry as a result of the COVID-19 pandemic.

For most of April, weekly RevPAR declines of more than 80% year-over-year across the United States were common. While resort destinations such as Hawaii and parts of Florida have seen tremendous decline in hotel performance, the current pandemic has limited commercial, leisure and group travel, thus impacting the performance of hotels in all markets throughout the United States. Locally in Cleveland, the impact has been heavy over the past two months.

How it all began
The first warning sign for the Ohio hotel industry came on 3 March when Governor Mike DeWine and Columbus Mayor Andrew Ginther announced the restriction of spectators and tradeshow attendees at the 2020 Arnold Sports Festival. The annual event draws an estimated 200,000 visitors and 22,000 athletes from more than 80 countries and brings approximately 18,000 roomnights to area hotels. The cancellation of the trade show and expo had dramatic effects on Columbus-area hotels.

Six days after Governor DeWine’s initial statement on the event, the first three confirmed cases of COVID-19 in Cuyahoga County were announced. From there, a host of cancellations of major events effectively shut down travel and tourism in Ohio. Events that were scheduled in Cleveland that were later cancelled included the following:

  • The men’s and women’s Mid-American Conference (MAC) basketball tournaments. Cleveland hosts both tournaments annually at Rocket Mortgage FieldHouse, and in 2019, the men’s tournament averaged more than 3,000 attendees per game.
  • The men’s first and second rounds of the NCAA tournament. On the same day MAC officials announced the cancellation of their postseason tournaments, the NCAA announced they would be canceling all winter and spring sports championships.
  • The American Cornhole League (ACL) Championship. On 13 March, the ACL announced that Cuyahoga County officials had informed them the event would not be able to take place citing concerns for public health.

According to Crain’s Cleveland Business, the economic impact from the men’s NCAA tournament games was projected to be $8 million, while the ACL championship was expected to bring in 1,000 competitors and have a total economic impact of $800,000. While these were among the first major events canceled in the Cleveland area, this was only the beginning of the impact that would be felt by local hotels.

Managing the fallout
The cancellation of the 2020 NCAA men’s and women’s basketball tournaments marked a significant first in the history of both collegiate sports, and more event postponements and cancellations would soon follow. Gordon Taylor, VP of convention sales and services for Destination Cleveland, said that all the groups that originally booked for April were successfully moved to later in 2020. However, Taylor expressed concern as to whether it will even be possible to have those rescheduled events beginning in August as there is no certainty on when the restrictions on mass gatherings will be lifted. The organization is dealing with the second wave of rescheduling with groups that had events scheduled for July through September and are now reaching out to reschedule or cancel.

In early May, Cleveland was set to host its largest convention of the year that was going to bring approximately 8,000 room nights to the area. This event has been moved to August, but Taylor cautioned even if the event could proceed, it still may mean less than half of the original number of room nights. With social distancing, the capacity for the convention center would be sharply reduced. So far, the furthest out he has had a group contact him about rescheduling their event is November 2020.

After significant declines in demand in the weeks following the cancelled events, some downtown hotels made the decision to close altogether. The Westin Cleveland Downtown, Kimpton Schofield Hotel and Cleveland Marriott Downtown at Key Tower all closed in late March 2020. The Westin has since re-opened. Several other hotels in downtown Cleveland have since temporarily halted operations and the total number of downtown hotels closed as of 19 May was six.

For the hotels that have remained open, many are averaging less than ten occupied rooms per night. Hotel owners that we interviewed shared that many of their hotels have remained open throughout the pandemic but have only been achieving single or low double-digit room nights. One property has benefited from having multiple insurance claim guests in-house, but traditional corporate demand is almost nonexistent.

In addition to low commercial demand, leisure demand is also projected to see sharp decline. Late spring would normally begin the draw of spectators for Major League Baseball games, and shortly thereafter, summer concerts. Presently, the MLB season has been suspended and there are ongoing discussions between players and the league as to whether there will be a season at all, though it is unlikely there would be spectators even if the season were to go ahead. In early May, the Cleveland Orchestra announced it would be canceling all 2020 summer performances at Blossom Music Center. Many other shows scheduled to be held at Blossom for the upcoming season have also been canceled. With the reduction of leisure visitors, the most optimistic estimate of when hotels could begin to see typical performance levels would be in 2021.

Impact by the numbers
The Cleveland hotel market finished 2019 with a record level of hotel supply, but also a record level of demand, according to STR. The local construction boom that has taken place over the past few years drove a few of the older hotels into foreclosure, but as a whole, the market was seeing positive signs for the future coming into 2020. Occupancy declined in 2019 for both the Cleveland market and the Cleveland CBD/Independence tract as defined by STR; however, with fewer supply additions projected in 2020 compared to recent years, performance was projected to improve. Destination Cleveland had initially set a goal of 20 million visitors for 2020, a significant milestone for the region. With travel coming to an abrupt halt in March, the occupancy figures year to date for both the Cleveland market and the Cleveland CBD/Independence tract began to fall. The decline in ADR for the year-to-date figures was less significant mainly since hotels were not deeply discounting rates when occupancies began falling. The following tables show the performance for the past three years and year to date through March for both the Cleveland market and the Cleveland CBD/Independence tract.

20200605 ClevelandAnalysis Chart1 - Cleveland market still well-positioned after COVID-19

Compared to the United States as a whole, both the overall Cleveland hotel market and the Cleveland CBD/Independence tract experienced more significant decline in hotel performance through March. While Cleveland was experiencing cancellations stemming from events such as the NCAA tournament and the ACL championship in early March, many other markets began to feel the effects of the pandemic a few weeks later. The Cleveland market has historically achieved lower performance levels than the United States as a whole, but the Cleveland CBD/Independence tract finished 2019 with a stronger ADR and RevPAR than the United States as a whole, which achieved an occupancy of 66.1%, ADR of $131.21, and RevPAR of $86.76. While the effects were felt heavily in Cleveland early in the pandemic, there is reason for optimism that when the industry begins to recover the region could perform above the national average as there will be greater levels of drive-to tourism.

What lies ahead
The question now on everyone’s mind is what this all means for the industry both locally and nationally. While nobody can say for certain, we are starting to see what hotel stays may look like for the immediate future. Hotels are implementing new measures to minimize risks for guests, including:

  • emphasizing mobile check-ins;
  • requiring reservations to use the fitness center to avoid overcrowding;
  • eliminating daily housekeeping services to reduce contact between employees and guests; and
  • eliminating breakfast buffets either altogether or replacing with grab-and-go breakfast instead.

It remains to be seen if these measures will significantly impact the rates hotels are able to charge if the services that are traditionally included are now limited or eliminated entirely. Hotel owners we spoke with stated they are cleaning the public areas regularly, working with chemical companies to identify the most effective products and messaging guests about protocols that have been implemented.

Even with all the safety measures being implemented by hotels, many travelers remain wary of staying in hotels right now. In a recent survey conducted by Harris Poll, 95% of respondents stated they either did not plan to travel or were unsure if they would travel over Memorial Day weekend. This led to AAA not releasing a 2020 Memorial Day weekend travel forecast for the first time in 20 years. The poll also revealed that only 22% of respondents planned to travel by the end of August, and perhaps more alarmingly, 53% said they would not be traveling for leisure before 2021.

Though the immediate future may be challenging, not all hope is lost for the Cleveland market. Amid the seemingly endless cancellations rolling in, the NFL announced the dates for the 2021 NFL Draft scheduled to be held in Cleveland would be 29 April to 1 May. The 2020 NFL Draft was held remotely and Las Vegas, the original 2020 host, was awarded the 2022 NFL Draft in place of the cancelled event.

In recent years, the NFL Draft has become a major spectacle, and this was on full display when Nashville hosted the event in 2019. It was estimated that 600,000 people attended the event and the city saw an economic impact of $224 million, with approximately 51% of attendees staying in hotels for an average of 2.8 nights. The 2018 draft in Dallas attracted 200,000 visitors with an economic impact of $125 million.

Beyond the NFL Draft, Cleveland has several other major events lined up for the next few years:

  • In 2022, Cleveland will host the NBA All-Star weekend and in 2024 the city will host the NCAA Women’s Final Four.
  • In late 2019, the American Society of Association Executives (ASAE) announced Cleveland would be the host city in 2024 for the ASAE Annual Meeting & Exposition, an event dubbed the “Super Bowl” of meetings. Columbus hosted the event in 2019 and saw 5,500 attendees visit the city. It is estimated that 20% of attendees of this event will book their own conference in the host city within five years of the event.

Regional travel and corporate demand
Providing a slightly more optimistic outlook than the Harris Poll, GasBuddy found that 31% of Americans were planning to take a road trip this summer in its annual Summer Travel Study released in May. Though this number is down from 44% recorded in 2019, only 18% of respondents definitively ruled out taking a road trip. Low gas prices are playing a factor in summer travel plans as 36% of survey respondents who are planning to take a road this summer cited low gas prices as a factor in their decision. As more Americans plan to travel by car in the immediate future, Cleveland will attract demand from regional cities such as Pittsburgh, Chicago and Buffalo, among others. Approximately 43% of the United States population is within a 500-mile radius of Cleveland.

On the commercial side, Cleveland received positive news when one of the region’s largest employers, Sherwin-Williams, announced they would be building their new 1-million-square-foot world headquarters in downtown Cleveland along with a research and development facility in Brecksville. It is estimated as many as 400 new employees may move to the area because of the new facilities. Sherwin-Williams recently announced that spending on both of these facilities is currently halted as a result of the COVID-19 pandemic but added that critical planning activities will move forward at a slower pace and the timeline for the project has not been affected. The new facilities could open as early as 2023, providing a major boost to the region in terms of employment and to the hotel industry with the potential for more corporate travelers coming to the area.

When 2020 concludes, it is likely the United States hotel industry will post its worst annual performance in recent history and potentially one of the worst years ever recorded. Looking at the Cleveland market provides us with great insight into what we may expect nationally as the pandemic continues to unfold and the industry begins to look at long-term opportunities. With no clear timeline on when the pandemic crisis will be resolved and no way to know what it will look like when it is, much of the industry will be left with an uncertain future.

Many industries will feel the impacts of COVID-19 well beyond the initial reopening phases, and the hospitality and tourism industries have seen and will continue to see enormous declines from recent years. Cleveland’s hotel market is no exception to this trend, but with many major events on the horizon over the next few years and the growth of a Fortune 500 company in its backyard, the region has several reasons to be optimistic about coming out of this pandemic on top.

This article was originally published by Hotel News Now


Adam Zarczynski, CHIA is an Associate at Hotel & Leisure Advisors (H&LA), a national hospitality consulting firm. H&LA specializes in appraisals, feasibility studies, impact analyses, economic impact studies, and litigation support for hotels, resorts, waterparks, casinos, conference and convention centers, golf courses, ski resorts and other leisure real estate. Adam is a graduate of Niagara University. You can reach Adam in our Cleveland office via email at or by phone at 216-228-7317.