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U.S. Hotels The Future for the Lodging Industry
When Will Convention and Group Demand Come Back?
October 28, 2020
Key Takeaways
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- The return of group and business travel is a major factor in hotels’ recovery. A more remote workforce will demand more in-person connection through business travel and conventions.
- From every $1 invested in business travel, firms realize $12.50 in incremental revenue. The elimination of business travel reduces profits by 17% in the first year.
- Revenue per available room (RevPAR) in dense urban markets remains over 80% below 2019 levels. A key driver of recovery in these markets will be the return of corporate demand, which made up almost 50% of demand for upper tier properties in 2019.
- Given the short-term nature of travel restrictions we expect a relatively quick, and strong, bounce back for the lodging industry, with occupancy reaching pre-COVID-19 levels in 2023 and nominal RevPAR reaching 2019 levels by 2024-2026 for upper tier hotels.
- Safety concerns and corporate travel bans are primarily preventing the industry’s recovery.
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