US hotels seeing ‘unprecedented lows’ in occupancy amid coronavirus fallout

Apr 3, 2020

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Airlines may be catching more headlines than hotels when it comes to the dramatic impact that COVID-19 has had on travel, but hotels are being hit at least as hard as airlines in many respects. Hotels are now reporting performance results that are beginning to reflect the full impact of the spread of the novel coronavirus.

Just how bad is it? Well, the island of Oahu reported a weekly occupancy rate across the island — which includes the capital of Honolulu — of just 10.5%, a stunningly low figure for a destination that’s consistently popular with tourists from around the world.

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Unsurprisingly, the most recent weekly results — from March 22-28, 2020 — reported by hotels across the U.S. are grim. In fact, they’re the worst weekly results that we’ve ever seen, “with more than 75% of rooms empty around the nation last week,” according to STR, a firm that compiles market data, analytics and benchmarking for the global hospitality industry.

Last week’s report shows that the three key indicators of hotel performance were down dramatically from the same week in 2019. STR’s data shows that occupancy was down 67.5% to just 22.6%; the average daily rate (ADR) was down 39.4% to $79.92 and revenue per available room (RevPAR) was down 80.3% to $18.05.

Related: Everything you need to know about traveling during the coronavirus outbreak

STR’s report of the week of March 22–28 also points out that when taken as a whole, the nation’s top 25 hotel markets suffered steeper declines in all three metrics than smaller markets, which makes sense given that the coronavirus has wreaked more havoc on more densely populated cities than on less-dense cities, towns and rural areas.

According to the data, the city of New Orleans saw the most dramatic decrease in RevPAR, the island of Oahu in Hawaii had the biggest drop in occupancy (as mentioned above) and the Miami area had the biggest drop in ADR.

STR predicts that we will continue to see similarly dismal results until the U.S. can get the spread of the disease under control and the spread starts to slow. And, it projects that the dramatic decrease in occupancy in hotels all across the nation will likely result in a significant decline in RevPAR for U.S. hotels in 2020.

However, many in the industry do believe that we will begin to see a recovery beginning this summer as the world begins to function once again. Should you book a trip now for the future? Many hotel chains are making that an easier proposition with looser cancellation policies. So, if you’re in a position to do so, planning a trip for the end of this year or early 2021 isn’t a terrible idea. Just be sure to carefully read the hotel’s current cancellation policy in case you need to rebook for a date further out.

Some hotel chains are offering guests additional flexibility by waiving change and cancellation fees on reservations. For example, Hilton has said that any new and existing reservations — even nonrefundable or advanced purchase rates — that are booked between March 12 and April 30, 2020, for any future arrival date, can be changed or canceled at no charge up to 24 hours before arrival.

And, Hyatt has said that any reservation for travel you make between March 13, 2020, and April 30, 2020 – for any future arrival date – can also be changed or canceled at no charge up to 24 hours before your scheduled arrival.

Bottom line

Seeing numbers like this is jarring. The travel industry has never faced a challenge like this before in modern history, and every aspect of it has been affected dramatically.

We’re looking forward with great anticipation to the day — hopefully in the not-too-distant future — that the travel industry begins to regain its footing and the world starts to buzz again with the activity of travelers crisscrossing the globe.

Featured photo by Valery SharifulinTASS via Getty Images

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