Vaccinations and Economic Stimulus Spur Stronger Second Half Performance for US Hotels
19 Apr 2021
Virginia Beach’s Hotel Market Expected To Generate Gains in Occupancy, Rate and RevPAR By 2022
Virginia Beach – April 19, 2021 – 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®, CBRE Hotels Research is forecasting an average national occupancy level of 43.0% during the first half of 2021, accelerating to 55.1% in the second half of the year.
“The Greater Virginia Beach hotel market demand is forecast to increase by 16.5% in 2021. Demand growth in 2021 and beyond can be attributed to the continued vaccine rollout and the strength of drive-to leisure demand in coastal destinations,” said Brian Damron, a Senior Consultant at CBRE Hotels Advisory’s Northeast Division. “Overall, the Virginia Beach hotel market is expected to make a comeback to 2019 levels sooner than most other metropolitan market areas, with a return to pre-pandemic levels in 2023.”
The report also states that Virginia Beach’s overall hotel occupancy in 2021 is forecasted to be at 52.5%, increasing to 58.1% in 2022. Virginia Beach’s ADR (average daily rate) is forecast for 2021 at $100.44 and is projected to increase by 8.3% in 2022 to $108.79. The RevPAR (revenue per available room) is projected to be $52.71 in 2021, increasing by 19.8% to $63.16 in 2022.
“Our current forecast takes into account a national rollout of the COVID vaccines, plus the December COVID Relief Bill, both of which support the projections of improved performance during the second half of the year,” said Rachael Rothman, Head of Hotels Research & Data Analytics for CBRE. “Based on our forecasts, the worst of the top-line declines are now behind us. We are beginning to see green shoots of a recovery in air travel data, booking patterns, and revenue per available room (RevPAR).”
CBRE advises hotel owners and operators to evaluate performance by location, property type and chain scale, and 2021 is no exception.
“Upper-priced properties will see faster growth in 2021 fueled, by easier comparisons and an uptick in business and leisure travel. However, occupancy levels still will trail those of the mid- and lower-tier properties,” Rothman said.
RevPAR gains will vary widely by market as well. Hotels in markets such as Minneapolis, Washington, D.C., Boston, Chicago and Philadelphia are expected to enjoy RevPAR gains of more than 50.0% during the year. However, results still will fall meaningfully short of prior peaks. By year end, smaller cities like San Bernardino, Dayton, Oklahoma City, Virginia Beach and Savannah will be closer to returning to 2019 RevPAR levels than other markets.
Growth Beyond 2021
CBRE’s February 2021 forecast calls for a return to 2019 RevPAR levels in 2024. In general, properties that operate in the lower-priced chain-scale segments will recover sooner than the higher-priced hotels.
One factor supporting enhanced lodging performance in the second half of this year and beyond is a reduction in the traditional lodging supply. The combination of permanent closures and fewer projects starting construction has resulted in a reduction of CBRE’s hotel supply forecast for 2021 to a gain of just 0.9% for the year. CBRE estimates supply growth will remain below 1% through 2023.
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The Q4 2020 edition of Hotel Horizons® for the U.S. lodging industry and 65 major markets can be purchased by visiting: https://pip.cbrehotels.com
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.