Lodging Industry Update

Cleveland Research Company provides real time, up-to-date statistics on the state of the lodging industry in the wake of the global pandemic that is rocking the industry.

Key Points of their latest update:

  1. Hotel demand continues to fall, with anticipated RevPAR declines accelerating in the last few days. What began with Group cancels and corporate travel bans has broadened to more widespread canceling of upcoming leisure/Spring Break trips
  2. March and April RevPAR slipping by the day amongst  revenue managers as more cities look on a path for lock-downs and close restaurants/bars, now cutting into the relatively more durable base leisure demand. Similar to prior RevPAR contractions, we are seeing Urban Lux and Upper Upscale fall by a larger magnitude while Suburban and Interstate (both more levered to drive markets)is holding up relatively better; more and more hotels considering shutting down
  3. Tremendous amount of stress on the hotel system as it relates to near term cash flow, layoffs, potential for hotel closures, and the implications for relationships between brands, owners, and management companies. Most expect hotel closures, layoffs and point to a need for government assistance for furloughed employees.Lenders are likely to work with owners in the next 3-6 months.4.Key focus right now in the industry is ADR in the midst of occupancy declines, with most attempting to live with lower occupancy and not make same mistakes as last time, which is easier said than done.In the last 2 contractions of following 9/11 and the financial crisis, TTM ADR declines bottomed at down 4%and 10% respectively and took 1-1.5 years to get there.As for the rate recovery,it took 5-6 years on an inflation adjusted basis to get rate back to the prior peak. Rate takes longer than OCC to recover.

To see the entire update, click here.