Citing the recent spike in Covid-19 cases, PricewaterhouseCoopers now anticipates a slower recovery than previously forecast for the U.S. lodging industry, according to the company's November Hospitality Directions U.S. report. Final projections for 2020 were stronger than its May report for two of the three key performance indicators, while 2021 KPIs were significantly lower.
Full-year 2020 U.S. occupancy is anticipated to land at 44 percent compared with its May forecast of 38.7 percent. PwC anticipates revenue per available room to decline 47 percent year over year, versus the 53.1 percent drop previously forecast. Yet 2020 average daily rate will decline further than expected in May, from 19.9 percent to 21 percent.
Anticipated 2021 occupancy is 52.7 percent. ADR is expected to remain relatively flat with 0.3 percent year-over-year growth. As a result, RevPAR should continue to decline in the first quarter—especially considering January and February 2020 were pre-pandemic in the U.S.—and begin to recover the remainder of the year, with an expected rebound of 19.1 percent over 2020.
The report acknowledged that forecasting in such an uncertain environment was complex, with many variables that continue to evolve. Vaccine trial news has been encouraging, but mass production and distribution may not occur before mid-2021. Recent surges in cases and fatalities likely could further dampen both leisure and corporate lodging demand. Various testing, quarantining and insurance requirements, ongoing lockdowns, and border restrictions continue to create uncertainty among willing travelers, according to the report.
Further, without additional federal aid, there is fear of a wave of hotel re-closures and potentially an unprecedented number of foreclosures.
PwC also noted that destinations reliant on business travel, group and international travel continue to suffer the most, and the delay in corporations reopening their offices would further set back the resumption of travel and meetings. The report cited Amazon's $1 billion savings in travel-related expenses, as well as the likelihood of remote conferencing technology use remaining after work-from-home mandates are scaled back, coupled with companies' growing fiscal and environmental accountability, indicating that a share of corporate travel may not return.
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