Advertiser Disclosure

advertising disclaimer
Skip to main content
hotel checkin

4 Stats That Show Why Hotels Are in Trouble

Feb 23, 2021 by Maurie Backman
Get our 43-Page Guide to Real Estate Investing Today!

Real estate has long been the go-to investment for those looking to build long-term wealth for generations. Let us help you navigate this asset class by signing up for our comprehensive real estate investing guide.

*By submitting your email you consent to us keeping you informed about updates to our website and about other products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.

It's been a tough year for the hotel industry, to say the least. Quarantine mandates and other restrictions have caused Americans to cut back on travel in a very meaningful way, and that's caused a serious decline in lodging demand. And while things will hopefully improve for hotels once coronavirus vaccines become widely available to the public and the pandemic is better controlled, the hospitality industry has a number of rough years ahead. Here are four statistics that highlight just how bad the problem is, per the American Hotel & Lodging Association.

1. Hotel employment is unlikely to reach pre-pandemic levels until at least 2023

The hotel sector laid off a devastating number of workers in the course of 2020, but things won't improve tremendously on that front for years. Layoffs have been especially rampant in urban hotels, which have taken a notable beating in light of the fact that business travel saw a major decline in 2020. In 2022, the number of hotel jobs is projected to increase modestly compared to 2021, but all told, hotel employment won't return to pre-pandemic levels until 2023 at the earliest. This, in turn, will wipe out more than 10 years of job growth in the industry.

2. Hotel occupancy is projected to average just 52% in 2021

In 2019, nearly 56,000 U.S. hotels enjoyed an average annual occupancy rate of 66%. The pandemic, however, has slashed that figure. In April of 2020, hotel occupancy fell to a record low of 24.5%, and for 2020 on a whole, annual occupancy fell to about 44% -- a huge decline from 2019. Meanwhile, hotel occupancy this year is expected to average 52.5%, an increase of just 8.5% from 2020. That's better than nothing, but it's nowhere close to 66%.

3. 2021 hotel room revenue is expected to reach just 65% of 2019's total

Before the pandemic took hold, the hotel industry's 5.3 million guest rooms generated an impressive $168 billion in annual room revenue. That's not including the money generated by hotel meeting and conference rooms. In 2020, hotel room revenue fell by nearly 50% across the U.S. to just $84.6 billion. And room revenue is only expected to increase by $25.9 billion this year, which would close out 2021 at 34% below 2019's levels.

4. Business-travel revenue won't return to 2019 levels until 2024

While a downtick in leisure trips has no doubt added to hotels' pain this past year, the fact that business trips have been largely put on hold has been a prominent driver of revenue loss. And given where we're at in terms of the pandemic, demand for business travel is not expected to return to 2019 levels until 2023. In fact, 2023's final quarter is expected to be the first quarter in which business travel exceeds that of the corresponding quarter in 2019. Since hotel room revenue tends to lag behind demand, that recovery won't take place until 2024.

Clearly, there are lots of reasons to be pessimistic about the hotel industry these days, and hotel investors have plenty to worry about. The good news is that hotels are getting creative in an effort to save themselves. Some are looking to become vaccination centers. Others are becoming apartments. While there's a good chance we'll see a boom in both business and leisure travel once the pandemic truly becomes a thing of the past, the big question will be whether hotels can hang on until then. Ultimately, only time will tell.

Unfair Advantages: How Real Estate Became a Billionaire Factory

You probably know that real estate has long been the playground for the rich and well connected, and that according to recently published data it’s also been the best performing investment in modern history. And with a set of unfair advantages that are completely unheard of with other investments, it’s no surprise why.

But those barriers have come crashing down - and now it’s possible to build REAL wealth through real estate at a fraction of what it used to cost, meaning the unfair advantages are now available to individuals like you.

To get started, we’ve assembled a comprehensive guide that outlines everything you need to know about investing in real estate - and have made it available for FREE today. Simply click here to learn more and access your complimentary copy.

The Motley Fool has a disclosure policy.