Hotel industry leaders came together virtually on Thursday, January 14, 2021, during The Lodging Conference and HVS’s “View from the Top” webinar to share their insights, strategies, and outlook for the year ahead and beyond. Moderated by Chip Rogers, AHLA president and CEO, the discussion kicked off with a presentation by Rod Clough, president of HVS Americas, sharing an updated industry outlook for the next four years. Following Clough’s presentation was a panel discussion featuring Geoff Ballotti, president and CEO, Wyndham Hotels & Resorts; Dave Johnson, executive chairman, Aimbridge Hospitality; Justin Knight, CEO, Apple Hospitality REIT, Inc.; Heather McCrory, CEO, North and Central America, Accor; and Biran Patel, chairman, AAHOA.
Clough began by sharing HVS’s industry outlook and the ways in which current events are affecting hotel performance and values. Among key performance indicators, occupancy is expected to recover first, up 27 percent in 2021 over last year to a national average of 53.5 percent compared to 42 percent in 2020. Average daily rate (ADR) will likely lag (up 6 percent in 2021 over 2020), and the industry is not expected to return to 2019 RevPAR levels until 2024. While transient business is forecast to come back the fastest, HVS expects group business to be back in place by 2023. Hotel performance continues to differ across asset class, with economy hotels reporting the least impact—although still suffering year-over-year declines across key performance indicators—and luxury hotels reporting the greatest year-over-year occupancy declines while holding rate relative to last year, which could hasten the segment’s recovery once occupancy finally returns.
Clough reported that HVS is not seeing significant activity in the transaction market as PPP funding and relaxed forbearance rules delay foreclosures. A significant increase in hotel transaction volume hinges on sellers’ ability to accept significant discounts from pre-COVID values, buyers’ ability to obtain finance, and each hotel’s performance outlook.
Following Clough’s presentation, industry leaders weighed in on what they expect in 2021—both what excites them and what keeps them awake at night. Ballotti began by expressing optimism for the year ahead. “The longest-running upcycle has just ended, and Rod, STR, and so many in our industry are predicting a really record comeback in terms of leisure-transient in the second half of this year, and I think we’re already seeing that,” Ballotti said, referencing STR’s weekly hotel performance data for the beginning of the year and recent year-over-year occupancy levels for economy hotels.
McCrory shared that she, too, is bullish towards 2021, but remains cautious. “I’m very hopeful that  is going to come in the way that everybody’s predicting that it will. What scares me the most—what worries me and keeps me awake at night—would be that it doesn’t,” she said. “We’ve gone through a tough year in 2020…We need some relief: The market coming back, things settling down. My biggest worry is that it just won’t happen as quickly as we need it to.”
Johnson expects 2021 to be more of a transition year and feels more optimistic about 2022 and beyond. He expects “healthy people” will not receive the COVID-19 vaccine until late summer and early fall, and that there will be a period during which those considering travel will wait for infection and mortality rates to decline. However, Johnson noted that the demand is there—people are itching to travel again. “The whole country was locked down in the second quarter [of 2020]. We saw it in the summer across all of our assets—leisure came back,” he added.
Patel also expressed concern towards the year ahead, particularly in ADR recovery. “Depending on where, what industry segment you’re in, and what type of hotels you own, we’ve taken a hit, probably to about 15 years, where our ADR’s gone back,” Patel said. “Another thing that worries me is the return of corporate travelers. Hopefully, the trend of online meetings is not somewhat permanent.”
“I think there’s no doubt there’s a tremendous amount of pent-up demand, both on the leisure and on the business side,” Knight shared. Later in the conversation, he noted that many business travelers are, in fact, taking trips right now in the form of leisure vacations with their families during which they are working remotely. “What we’ve seen on the leisure side is incredibly positive. The conversations that we’re having with our business accounts are positive as well,” Knight said. “We just need the vaccine and we need protection for employers so that we can really free up that demand and get back to occupancy levels that can support hotels in our industry.”