Hotel market shows signs of recovery heading into second half of the year

The continued rollout of COVID-19 vaccinations and additional stimulus funds have strengthened the foundation for the recovery of the U.S. lodging industry, according to the February 2021 edition of Hotel Horizons. For the hotels in the Salt Lake City metropolitan statistical area (MSA), occupancy is forecast to average 52 percent in 2021, an increase of 9.5 percent over 2020. This still is well below the market’s pre-pandemic occupancy in 2019 of 70.9 percent, but it marks the beginning of a recovery in the sector.

Nationwide, CBRE Hotels Research is forecasting an average national occupancy level of 43 percent during the first half of 2021, accelerating to 55.1 percent in the second half of the year.

“The quicker-than-anticipated national rollout of COVID-19 vaccines coupled with the December COVID relief bill have improved the outlook for the U.S. hotels market,” said Julie Pernell, executive vice president, at CBRE Hotels Advisory. “We expect hotels and drive-to destination resort areas catering to leisure travelers to continue to see the fastest gains in occupancy. We anticipate business travel to pick up in the latter half of the year, benefiting urban and suburban upper-priced properties,”

The Salt Lake City MSA’s average daily room rate (ADR) is expected to average $84.11 this year, an increase of 1.9 percent from 2020. Resulting revenue per available room is expected to grow to $43.70 by year-end 2021, an increase of 11.6 percent from the close of 2020. The Salt Lake City MSA hotel market is projected to be nearly fully recovered in 2023, with an expected ADR of $106.10, just 2.8 percent less than the ADR achieved in 2019.