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Hospitality Looks Forward To Summertime Boom, But The Industry Is Still Wounded

Leisure travel is looking to surge over Memorial Day weekend and into the summer as vaccination rates edge higher, mask and other pandemic mandates fade, and people start gathering in groups.

Now, the pandemic-crushed hospitality industry says it anticipates a boost.

But with business travel still largely absent, a summer travel boost will be only the beginning of recovery for hospitality, with the possibility of the unknown still haunting the business, industry experts say.

Empty rooms: The hotel industry has been hit hard by the pandemic, with little help so far from the government.

"I'm nervous to say anything because I feel like every time we're feeling optimistic, Covid throws us another curve," said Jan Jones, University of New Haven Professor of Hospitality and Tourism in the Pompea College of Business. "There are these variants and some issues with some of the vaccines, but I'm the most hopeful that I've been in a long time."

The coming rise in travel will be significant, though not yet to pre-pandemic levels. AAA predicts that from May 27 through May 31, which will be Memorial Day weekend, more than 37 million Americans will travel 50 miles or more from home, up 60% from the same holiday weekend last year, when only 23 million traveled, the lowest total since AAA began tracking in 2000.

Even so, the AAA-projected 2021 total would still be 13%, or nearly 6 million travelers, less than in 2019. The organization further reports significant recent increases in online traffic and bookings on, particularly for hotels and car rentals, heading into the summer travel season. 

Auto travel for the holiday is expected to increase 52% compared to 2020, with nearly 12 million more Americans traveling by car this year than in 2020, though that is still 9% less than in 2019, AAA notes. After a historically low year of air travel in 2020, nearly 2.5 million Americans will fly somewhere this year, nearly six times more than last year. Still, 750,000 fewer people are predicted to fly compared to 2019. 

Passengers passing through the nation's airports have vastly increased in 2021 compared with 2020, but as yet haven't risen to 2019 levels, according to data generated by the Transportation Security Administration. On Friday, May 14, 2021, over 1.7 million people passed through airport security, compared with about 193,000 on Friday, May 15, 2020, but more than 2.6 million on Friday, May 17, 2019.

STR reports that average U.S. hotel occupancy has been hovering between 55% and 60% since March, with a recent small drop to 56.7% for the week ending May 8, as more hotels reopen and the supply of rooms expands. Before the coronavirus pandemic, in February 2020, occupancy averaged around 65%, dropping to a low of 22.2% in April. Last summer, occupancy hovered around 50%, but it dropped to the mid-30s in the winter.

“The next stage of the U.S. travel recovery has commenced,” Tourism Economics President Adam Sacks said in a statement. “An effective vaccine rollout and generous fiscal stimulus will drive the fastest single-year economic expansion in nearly 40 years."

Even with 2021 projections higher, full recovery for hospitality demand won't be until 2023, Tourism Economics predicts.

Hospitality doesn't exist in a vacuum, Jones said, but instead is a symbiosis with a lot of other economic and social activity. As that activity begins to boil, so will hospitality.

"Now we're starting to see events revive, which is the industry that was hit the hardest," Jones said. "We're going to start to see smaller concerts this summer and sporting events, as both are going to be able to restore some of their capacities and remove restrictions." 

The international travel situation will have a definite impact on U.S. hospitality this year, Jones added. Some parts of Europe are opening, but progress is tentative, so Americans will likely travel closer to home this summer.

"A lot of people have saved money to travel [and] are looking to travel," Jones said. "But a lot of them are just not comfortable going international."

The 607-room InterContinental New York Times Square is an example of a hotel partly dependent on leisure travelers that closed for some months last year, reopening only in October 2020. Business has picked up considerably since then, according to InterContinental New York Times Square General Manager Gul Turkmenoglu. 

Now travelers are coming back in force, especially on weekends. The property's studio suites have sold out every weekend for 12 straight weeks, said Turkmenoglu, and overall weekend occupancies are between 85% and 95%.

The key to further recovery now is the return of business travelers, but Turkmenoglu doesn't expect that to happen over the summer.

"Conferences and events at the Javits Center aren't coming back anytime soon," she said. "But our business is definitely better than what we budgeted or what we thought was going to happen, maybe 10% to 15% more business than we expected."

For a time during the spring and summer of 2020, the hotel housed doctors and nurses treating coronavirus cases, and later it also offered rooms as temporary office space, Turkmenoglu said. That was an exceptionally difficult time to find labor.

"We couldn't find anyone, union, nonunion," she said. "We ran the property with the management on-site, and I didn't let go my senior management, though we took some cuts. That's how we managed to keep the team, and that's why I feel lucky that right now I'm not looking for managers. There's definitely a shortage in the market right now. A lot of other hotels can't find anyone, especially in midlevel management."

As occupancy goes up, the pressure will be on hotels to find workers, Jones said.

"I can tell you that among my students, the majority of them had their internships confirmed about a month ago because the smart companies knew that it was going to be very hard for them to get employees this summer," Jones said. "I still get calls from hospitality corporate offices who ask, Do you have anyone? Do you know anyone?"


The number of delinquent loans associated with hospitality CMBS, while still quite elevated, has been another mark of the slow recovery for the hospitality industry in recent months. At the beginning of the pandemic in April 2020, 2.71% of securitized hospitality loans were delinquent, according to Trepp data.

That figure ballooned to 24.3% by June. As of April 2021, the number is 15.65%, still higher than any other property type, but heading downward for 10 months.

Despite the volume of distressed loans associated with the sector, investors didn't shy away from hospitality completely last year, Reonomy Vice President of Growth and Partnerships Aviva Fink said, and there are indications that they were more interested in limited-service properties than before.

"The decrease was actually a decrease in investment in luxury hotels, which went down significantly, offset by an increase in economy and budget hotel investment," Fink said.

In 2020, institutional investors tracked by Reonomy (35 altogether) spent over $939M acquiring hospitality properties, a drop of 70% compared with 2020. Investors paid an average of $85 per SF for the assets, down 59% of the year before, suggesting a combination of a shift away from high-price assets, and some deals that were fire sales.

"Everyone's looking for a good deal," Fink said. "But the other thing is that certain markets may be underrepresented in luxury hospitality, and investors are looking to the long run by acquiring less expensive properties, with a goal of remaking them into luxury hotels or repurposing into multifamily properties down the road."

That might explain why such hotel markets as Austin and Nashville didn't see an investor decline in interest in 2020, Fink said, though it is still too early to say for sure. 

"We're definitely seeing that as a trend where markets that haven't been as hot previously are getting a lot of attention from investors," she said. "Repurposing properties is also something that's being talked about pretty extensively within our client base."

Hotels weren't the only form of hospitality that took a hit during the pandemic. Despite more travelers in the spring, short-term rentals remain depressed nationwide. The number of active Airbnb listings was down in 19 of 20 short-term rental markets examined between May 2020 and March 2021, according to a report by MagnifyMoney, a subsidiary of LendingTree.

Listings in New York City, for instance, dropped by 31% during the pandemic, while in Jersey City, New Jersey, the number of active listings fell 61%, the most among the 20 markets surveyed by MagnifyMoney. Only Broward County, Florida, eked out a gain of 2% in that period. Clark County, Nevada, home of Las Vegas, saw a 10% drop and New Orleans suffered an 11% drop in active Airbnb listings.

Like the rest of hospitality, it is going to be a slow recovery for short-term rentals in the near term, but there is some potential for the industry to heat up as the summer progresses, LendingTree Chief Economist Tendayi Kapfidze said. 

“Travel demand will be higher than last year," he said, adding that short-term rentals might even have a slight edge over standard hotels in some places in attracting travelers this summer.

"Even as we open up, I think some people are still going to be a little bit nervous about the more crowded areas such as hotels, but they still will want to travel," Kapfidze said. "So they might lean toward renting a house or something that's a little bit more secure, which gets them away from large crowds."

Overall, the recovery of short-term rentals will probably mirror that of the hotel sector, Kapfidze said. 

"Now there's about $2.3 trillion more in savings than before the pandemic," he said. "And you know, some of that is going to be spent on experiences that people missed."