Meeting Mentor Magazine

June 2024

Taking the Pulse of the Hotel Industry: Healing or Still Hurting?

The mood was jubilant at Meeting Professionals International’s World Education Congress in June. It felt like the long COVID winter had finally ended as more than 1,200 gathering at CAESARS FORUM in Las Vegas to celebrate the return of meetings and events. Most hoteliers MM spoke with at WEC acknowledged that it had been an incredibly tough time, with all-too-many layoffs and furloughs, but with leisure travelers taking advantage of cheap flights and low rates, things had been getting better for the hotel business. Now with more meetings heating up, many thought a full-scale hotel rebound was in sight. And it may well be — though the Delta variant may throw a monkey wrench into the projections.

Revenues and RevPARs Rebounding

As Q2 earnings reports began to trickle in this summer, major hotel chains such as Hilton, Wyndham and Marriott all substantiated the anecdotal good news with data-backed upswings in both net revenues and revenues per available room (RevPAR) over those reported in Q2 2020, mainly due to the leisure travel bump.

As late as last week, Hyatt President and CEO Mark Hoplamazian said on a Q2 earnings call that business transient and group business was looking up as of June. “More groups large and small have been returning to our hotels and ballrooms,” he said, adding that “group business booked in the second quarter for 2022 at an average rate that is 5% higher than the same period in 2019.” And association meetings, which tend to have much longer booking windows than corporate events, also are looking up. Next year, he said, “group business could be at something like 85 percent of 2019 levels.”

In other positive news, hotel industry data analysis company STR found that U.S. weekly hotel occupancy rates for the week of July 11-17 had reached their highest levels — 71% — since October 2019. STR analysts also credit pent-up leisure demand for the increase, while noting that hotels are still dealing with staffing shortages and, in some regions, increasing costs.

The Delta Factor

In the meantime, there’s the Delta variant, which along with becoming the dominant strain of COVID infection in the U.S. has brought with it an increase in infections and hospitalizations in many parts of the country. As a result, the Centers for Disease Control and Prevention (CDC) reversed its guidance to now call for all to wear masks while indoors, whether they’re vaccinated or not, and the reimposition of mask mandates and other pandemic protocols in states from California to Connecticut and Nevada to New York (which recently instituted a requirement that people be vaccinated or have proof of a negative COVID test to enter certain public venues). While most major events in the U.S. are still on the books, many venues are implementing vaccine or mask requirements (or both). Outside of the U.S., other countries are also dealing with a rise in infections due to the Delta variant — for example, officials in Beijing, China, have canceled large exhibitions and events for the rest of August in response to increasing COVID cases in that city.

All of this is giving meetings and events organizers a sense of 2020 déjà vu all over again as they scramble to re-evaluate their near-term meetings to determine whether to go on as planned, postpone, cancel, switch to a hybrid model, or go fully online. Cancellations are just now starting to trickle in, including the New York International Automobile Show, which was to open at New York’s Javits Center on August 19. Other meetings and events, such as Healthcare Information and Management Systems Society, Inc. (HIMSS) and the American College of Chest Physicians annual meetings, have already announced that attendees, staff and faculty must be vaccinated to attend.

An Uneven Road to Recovery

Even before the latest CDC and state guideline and mandate changes were instituted in response to the fast-spreading Delta variant in the U.S., the American Hotel & Lodging Association issued a report in mid-July that pointed to a long and uneven road to recovery for the U.S. hotel industry. Among the key findings:

– More than one in five of the nearly half-million direct hotel operations jobs lost during the pandemic will not have returned by the end of 2021. The prediction is that staffing levels will return to 2019 levels by 2023.

– Hotel occupancy is projected to drop 10 percentage points from 2019 levels. The good news is that occupancy is expected to rebound in 2022 to 61.7%, which edges closer to 2019’s 66% levels.

– Hotel room revenue in 2021 will be down $44 billion from 2019 levels, which were $169 billion exclusive of meeting room rentals and other ancillary income.

– The loss of business for hotels means that states and localities will have lost more than $20 billion in unrealized tax revenues over the past two years.

“Despite an uptick in leisure travel, midway through 2021 we’re still seeing that the road to a full recovery for America’s hotels is long and uneven,” said Chip Rogers, president and CEO of AHLA. To regain its former stature, hospitality needs business travel and major events and conventions to return, which AH&LA’s research said most likely won’t return to 2019 levels until at least 2023 for business travel and 2022 for meetings and events.

He added that, despite the extraordinary resilience hotels and their employees have shown in the face of unprecedented economic challenges, the industry needs help from Congress — whether it’s the Save Hotel Jobs Act, fair per diem rates, or expanding the aperture on the Employee Retention Tax Credit — to fully recover.


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