The final two panels of the North America regional overview during last week's Hotel Data Conference: Global Edition, which was put on by STR, covered a forecast from STR and two hospitality companies as well as a conversation with industry leaders.
Forecast
STR President Amanda Hite revisited the company’s downgrade of its U.S. forecast from January. The company is forecasting 1.2 percent total room inventory growth for North America in 2021, with 103,000 new rooms opening in the year. These will be offset by 48,000 rooms that are expected to close in 2021, she added, and the anticipated 0.9 percent growth rate in 2022 reflects the regained stability she expects to see from temporary closures, pipeline delays and reduced pipeline attrition.
Increased vaccinations will drive demand, Hite continued. “It was one of the key metrics that we sat down and looked at as we talked about this forecast,” she said. “We're already seeing that in the first quarter, but we expect that to pick up in Q2 through Q4 on the leisure demand side.” STR also expects to see business travel start to recover—“but that's going to be at a slower pace as compared to leisure travel,” Hite said.
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STR expects average daily rate to grow 4.3 percent for 2021, but Hite cautioned that this would vary across chain scales. “When you dig into that growth rate, the upper tiers are actually forecasting a record rate decline for 2021, while the economy through upscale chain scales are going to see positive rate growth,” she said. The company expects ADR growth of 8.2 percent for 2022 to about 89 percent of 2019’s levels.
While the January forecast was conservative, Hite said she was pleased to see that some predictions made then have already been proven wrong. For example, the number of rooms sold in January and February outpaced the projection by 23 million. With transient demand picking up, Hite expects the quarter to end stronger than anticipated.
Sheenal Patel, CEO of Arbor Lodging Management, said the company’s forecasts are significantly better than its current budgets, but due to rapid changes they can only project through April. Arbor expects a 21.6 percent increase in revenue per available room, or even closer to 30 percent by the end of the year “if things continue at this pace.”
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Jess Petitt, VP of analytics at Hilton, said his company’s initial forecasts are a tale of two different years. The first four or five months of 2021 will be a continuation of 2020’s trends, he said, “with a linear upward progression.” Then the summer seems poised for stronger numbers thanks to vaccinations and other demand drivers.
Executive Panel
The day’s final panel brought together several leaders from hospitality companies to discuss the balance of business and how new technology is changing the overall landscape.
Eric Habermann, COO at Pyramid Hotel Group, said his company’s demand is largely leisure-centric, although he is seeing “early signs of life” in business travel. In February, the company saw a 15 percent increase in new group prospects as compared to January. “Our extended-stay and our select-serve properties, generally speaking, are outperforming our upper-upscale and luxury properties,” he added.
Liam Brown, group president, United States and Canada at Marriott International, said that more than 80 percent of the group events the company’s hotels lost for last year and 2021 have been rebooked. Marriott is seeing a “big uptick” in interest for group bookings, sometimes less than a year out for smaller groups. “But the bigger groups, they're certainly there,”
Carlos Flores, president and CEO of Sonesta International Hotels Corp., said his company’s strength in the select-service and extended-stay segments was cause for optimism because these categories were not as heavily affected by the downturn as full-service hotels have been. “We look at some of our full-service gateway hotels, like for example, San Francisco, still in a really rough spot and waiting to see those green shoots present themselves,” he said. Like Brown, Flores said many of the groups are small, he said, but the interest is still an “objective reason for optimism.”
Flores also noted the industry’s rapid adoption of new technology. “A lot of ground has been covered probably in the last two to three years, but there was a gap going into the pandemic as it relates to consumer expectations and the overall industry’s readiness to satisfy that expectation,” he said.
Technology has also allowed hospitality professionals to work remotely, and Brown believes the pandemic has given the business world in general a greater facility with tools to network and get stuff done. The ability to work remotely can add to quality of life, he added, and can ultimately make it easier for a business to attract and retain team members.