At the 43rd annual NYU International Hospitality Industry Investment Conference, Amanda Hite, president and CEO of STR, shared with LODGING forecasts based on the numbers she and her team use to help hoteliers make educated business decisions. Hite shared further information following her insights announced during a panel at the conference. Her work for STR, she says, provides data benchmarking, analytics, and marketplace insights for hotels globally, so it was from that perspective that she weighed in on some of the stories behind the numbers.
What’s behind STR’s upgraded forecast for ADR, which was presented at this meeting?
In August, we revised our ADR upward up for the first time in my 16 years with STR. We did this based on data showing that ADR was stronger than we had been forecasting, and noticed that it correlated to a period in 2010 when we were emerging from the Great Recession. Leisure demand was high, as was expected in the summer months, but it continued in September and October, with very strong weekends, and there was also a demand spike Columbus Day week. All in all, we saw leisure travelers were continuing to act on a pent-up desire for travel and experiences.
As was the case in 2010, the industry is growing, energized by a spirit of optimism. We see opportunities for growth for the rest of this year and into 2022. These gains won’t be felt across the board and will probably be uneven in 2022—proceeding in fits and starts in some places. Still, nearly everyone now sees a light at the end of the tunnel.
What about measures other than revenue, like GOPAR (gross operating profit per available room)?
Higher expenses due to the higher cost of labor and goods experienced across all industries do play into the margins, so it will take longer for GOPAR to catch up to RevPAR and ADR on a nominal basis, and for profits to reach 2019 levels.
What pandemic-related issues continue to challenge the industry as it recovers?
First and foremost is the labor shortage. Many of the employees furloughed found employment elsewhere, so hoteliers need to find ways to bring them back. There’s also been a phenomenon felt by all industries in the wake of the pandemic—mass resignations of people who re-evaluated their lives and careers, based on their pandemic experience. Then, too, global supply chain issues are making it difficult to keep needed supplies on hand—towel, sheets, cleaning supplies—while demand is unpredictable.
In what ways is the growth “uneven” as mentioned?
Unlike the recovery from the Great Recession, which focused on the top 25 markets, the growth coming out of the pandemic has been focused on the smaller markets that make up the drive-to destination. This was the case even early on, in the summer of 2020, when people were flocking to places like Gatlinburg, Tennessee. There are also issues in popular destinations, like Hawaii, due to a surge in Delta variant cases, which prompted the governor to discourage tourists for a time. Another popular destination, San Francisco, is struggling to get on the track to recovery, likely because its business is related more to groups and office workers, many of whom have yet to return to offices.
What is the likely impact of the opening of international travel?
We did not anticipate having much international travel in 2021 and don’t see it surging in 2022 until every piece of the puzzle is in place for travelers, including overcoming barriers such as obtaining a visa, showing proof of vaccination, and monitoring infection rates in other countries.
What is your overall perspective going forward?
Given the high level of leisure travel now, I expect it to level out there, as consumers continue to spend the money they saved while shut in during the pandemic on travel. While I think it will take a while for business and group events to come back to previous peaks, it will at least begin to feel more normal. As for ADR, I expect it to remain strong as demand continues to pick up to include business and international travel as well as leisure, but we need disciplined revenue management to climb out of the hole left by 18 months of pandemic losses.
How can hotel owners best use the data and number STR offers to improve their own operations?
We love numbers at STR, but ultimately hotel owners and operators need to understand how they impact their business strategy. They should understand that behind the numbers is a story. I spend a lot of time with owners and operators translating the data into a story; then they can use the data as a backup to tell that story.