Day-Trippers And Weekenders Propping Up Atlanta Hotel Scene
Atlanta's hotels are seeing an occupancy comeback that is expected to exceed projections for the year following the coronavirus pandemic.
Atlanta’s hotel market is historically driven by group and business travel, but leisure travel is mostly to thank for this rebound. While key fundamentals are still lagging behind 2019, hotel operators are seeing leisure travel push up hotel occupancies in the city, especially during the weekends. Hoteliers also see the promise of continued improvement in the back half of 2021 as more big events take place in Atlanta and corporate travel ticks up.
“I think the recovery is going a little quicker than we expected. I think we'll get back to 2019 levels over the next 12 to 18 months,” Peachtree Hotel Group CEO Greg Friedman said. “It's being driven primarily by leisure up until this point.”
Leisure travel has outstripped business and group travel in helping to fill hotel rooms, Atlanta Convention and Visitors Bureau Executive Vice President Mark Vaughan said, a rare occurrence in Atlanta outside of major holidays like Labor Day.
Last year, the agency projected that the average occupancy for the city's hotels in 2021 would end up around 44%. The average for the first four months of the year already exceeds 40%, and the ACVB sees the prospect of not only further strengthening in leisure travel, but a rebound in business travel as well, Vaughan said.
“There's a lot of pent-up vacation demand. We're calling it revenge travel,” HVMG Executive Vice President Mary Beth Cutshall said, noting that her firm's Atlanta portfolio has been near capacity this year during the weekends. “Many people will probably be asking their managers for time off in the coming months.”
HVMG operates eight Metro Atlanta hotels, including the Embassy Suites by Atlanta Hilton in the Galleria/Cumberland and Central Perimeter submarkets and the Marriott Atlanta Northeast near Emory University.
Total occupancy in January was 36%, according to the ACVB, citing Smith Travel Research data. By April, it had jumped more than 10 percentage points to 47%. Last year, occupancy rates started strong at 68% in January and 74% in February, according to the ACVB. By March, occupancy plummeted to 32% and in April to just 9%. Total occupancy averaged 36% in 2020, compared to 74% in 2019.
Weekend average occupancy this year so far has been 63%, a sign of leisure demand, and far outpacing the 32% occupancy average Monday through Friday in the city. Weekend occupancy in 2020 was 47% while weekday hotel stays were 33%, according to the ACVB.
Pricing is also increasing. The average daily rate for Georgia hotel rooms is approaching the $90.77 nightly rate seen during the first quarter of 2020, according to a Colliers report. Georgia hotels commanded an $89.84 average daily rate in the first three months of this year. The revenue available per room (known as RevPAR in the industry) for Georgia hotels is trending up to more than $54 per night, outpacing the Q1 2020 RevPAR of $40.34, according to Colliers.
While still off from pre-pandemic highs, the average daily rate for all Georgia hotels is up 42% since April of 2020, according to Colliers.
Atlanta hotels are following a larger national trend in activity rebound largely underpinned by leisure travel. STR, which tracks hospitality industry data, noted in its April U.S. Market Recovery Monitor that occupancy in South and North Carolina and Florida was surging ahead of the nation at more than 70% thanks to bookings in beach areas, including Myrtle Beach and Hilton Head.
The Four Seasons Hotel Atlanta has seen a steady rise in leisure travel, especially from local Atlanta residents, since the hotel reopened last May, said Nancy Chacon, the hotel's general manager. The hotel's weekend business this year has outpaced occupancy from 2019 as well, Chacon said, helping to buffer RevPAR.
“It's very healthy,” she said. “I think because of Georgia being one of the first states to open, that had some impact.”
Upcoming events also promise to improve leisure stays at Atlanta hotels, including the Chick-fil-A Peach Bowl in January, home games for the Atlanta Hawks and the United, and Dragon Con in September, which will be back to an in-person event after going remote last year, Vaughan said.
“Leisure has been a sustaining demand through all of this, and the expectation is we're going to have a monstrous summer for leisure,” said Legacy Ventures founder David Marvin, whose firm owns five Atlanta hotels, including the Embassy Suites by Hilton Atlanta at Centennial Olympic Park and the Hilton Garden Inn Downtown Atlanta.
City officials are more optimistic that business travel — a key driver of Atlanta's hotel economy — will pick up in the coming months.
“As corporate travel restrictions are lifted and meetings and conventions return more regularly in the second half of the year, we expect to see increased activity in both,” Vaughan said in an email.
Cutshall also said she expects corporate travel to begin to pick up steam toward the end of the year as companies become acclimated to allowing travel and hosting personal meetings.
“The corporate is the lagging segment. But we kind of knew that would be the case for a year now,” she said. “I think September is going to be a pivotal date when many companies re-evaluate their corporate travel policies with the pandemic.”