CBRE has released its quarterly figures for Q2 2021, with some promising finds for the hospitality industry.
The hotel sector posted record performance gains in Q2 compared with a year ago. Demand increased 100.8 percent, occupancy was up 97.5 percent, revenue per available room improved 180.5 percent and the average daily rate grew 42 percent.
Still, the hotel sector’s main performance metrics remained below prepandemic levels. Compared with Q2 2019, demand was 13.9 percent less, occupancy was 16.7 percent lower, RevPAR was down by 25.3 percent and ADR down by 10.4 percent due to continued weakness in business travel, luxury property closures and general pricing pressures, according to the company.
While a number of hotels were forced to close during the pandemic, most have since reopened. Approximately 6.6 percent of luxury hotel properties remained closed at the end of Q2, down from 15.4 percent in Q1 and from a peak closure rate of 54 percent in April 2020. As additional higher-priced hotels reopen, overall ADR growth should accelerate, CBRE anticipates. The closure rate of all hotel properties stood at just 3 percent at the end of Q2 2021, down from 4.4 percent at the end of Q1 2021.
The relative strength of leisure travel combined with weakness in corporate and group travel is leading to shifts in distribution. Property-direct, online travel agency and brand.com channels have recorded the most growth over the course of the pandemic while group and corporate channels have continued to contract, according to CBRE's research.
Top Markets, Top Segments
The top 10 performing markets in Q2 were all Southern resort destinations with record-high RevPAR. The weakest 10 markets were all Northern urban destinations, where average RevPAR was still down by more than 60 percent relative to 2019, CBRE reported.
Resort and interstate hotel RevPARs met or exceeded their Q2 2019 levels, and hit record highs during the quarter. Small-town properties, meanwhile, are within 5 percent of the Q2 2019 levels. Urban RevPAR in June was roughly half of the prepandemic level. Suburban and airport hotels also lagged, with RevPAR down 23 percent and 30 percent, respectively, compared to Q2 2019.
Labor Woes
Average hourly wage hotel wages increased 13 percent year over year in June, outpacing the national average of 5 percent, according to CBRE. At the same time, the gap between hourly hotel wages and the national average is still more than $9. Numerous layoffs during the pandemic, a surge in hotel reopenings and the fact that hourly hotel wages are just 64 percent of the national average have led to a labor shortage for the industry. Job openings per hotel average nearly 26 at the end of Q2, according to the latest numbers.