Room revenue expected to drop $44 billion this year vs. 2019

Midway through 2021, a new report and state-by-state job loss breakdown released by the American Hotel & Lodging Association found that while leisure travel is starting to return, the industry’s road to recovery from the pandemic is long and uneven, with urban markets disproportionately impacted.

By the Numbers

Industry projections have improved since January with the uptick in leisure travel, but the industry remains well below pre-pandemic levels. In 2019, U.S. hotels directly employed more than 2.3 million people. The industry is expected to end 2021 with 1.86 million employees, down nearly 500,000 or 20 percent from 2019 levels. AHLA does not expect the industry to reach 2019 employment levels until at least 2023
 

At the same time, occupancy is projected to drop 10 percentage points from 2019 levels. The pandemic brought hotel occupancy to a historic low of 24.5 percent in April 2020, with annual occupancy in the United States dropping to roughly 44 percent for FY 2020. The AHLA expects hotel occupancy for 2021 to average 55.9 percent, up slightly from earlier projections of 52.5 percent, but still a 10-percentage point drop from 2019 levels. While some full-service hotels begin breaking even at 50 percent occupancy, this does not account for mortgage debt service costs, leaving most hotels still well below their break-even point, accourding to the group. On the bright side, occupancy rates are projected to rebound more significantly in 2022, reaching 61.7 percent.

Room revenue likely will be down $44 billion this year compared to 2019, when 5.3 million guestrooms nationwide generated more than $169 billion in annual room revenue, not including the additional tens of billions generated by renting meeting rooms and other ancillary revenue sources. In 2020, hotel room revenue fell nearly 50 percent across the U.S. to $85.5 billion. Room revenue is projected to rebound to $125.3 billion this year.

The AHLA expects that business and group travel, the industry’s largest source of revenue, will take a long time to recover. Business travel is down and not expected to return to 2019 levels until at least 2023 or 2024. Major events, conventions and business meetings have also already been canceled or postponed until at least 2022.  

By the end of the year, states and localities will have lost more than $20 billion in unrealized tax revenues from hotels over the past two years, according to the AHLA.

Association Efforts

“Despite an uptick in leisure travel, midway through 2021 we’re still seeing that the road to a full recovery for America’s hotels is long and uneven. These findings show the economic devastation still facing hotel markets and underscore the need for targeted relief from Congress for hotel workers and small businesses,” said Chip Rogers, president and CEO of the AHLA. “Hotels and their employees have displayed extraordinary resilience in the face of unprecedented economic challenges, but whether it’s the Save Hotel Jobs Act, fair per diem rates or expanding the aperture on the Employee Retention Tax Credit, we need Congress’ help on the way to a full recovery. That’s why the industry is united behind our Virtual Action Summit.” 

Despite being among the hardest hit by the pandemic, hotels are the only segment of the hospitality and leisure industry yet to receive direct COVID-related aid. The findings come as the AHLA and AAHOA host their Virtual Action Summit, during which hoteliers from nearly every state across the country are scheduled to meet with members of Congress to share how COVID-19 impacted the industry and call for additional aid by urging Congress to: 

• Cosponsor and pass the Save Hotel Jobs Act (S.1519/H.R.3093)
• Cosponsor and pass bills to establish fair per diem rates (H.R.2104/S.2160)
• Help provide hoteliers access to the Employee Retention Tax Credit, which currently excludes many hoteliers.