Forecast: Hotel occupancy to drop 29% in next 12 months
According to the Magid HTL Forecast Tracker, analyzed in conjunction with consulting firm Horwath HTL, the ongoing impact of the COVID-19 pandemic will lead to a 29...
- Aug 18, 2020
According to the Magid HTL Forecast Tracker, analyzed in conjunction with consulting firm Horwath HTL, the ongoing impact of the COVID-19 pandemic will lead to a 29 percent decline in annual hotel occupancy over the next 12 months. This, in turn, will result in a projected revenue loss for the industry of about $75 billion in room revenue alone.
The forecast shows declines driven by business and leisure travel intentions alike, but consumer sentiment for attending a meeting or conference over the next 12 months was the most telling, with a projected decline of 22 percent.
Reach & Frequency
Notably, while travel itself is down, the research shows that frequency intention remains stable from pre-COVID-19 levels. This suggests that while a smaller percentage plan to travel in the future, those that do plan to travel are likely to do so at a frequency that resembles their pre-COVID behavior.
Post COVID-19: The New Guest Experience
Join Hotel Management’s Elaine Simon for our latest roundtable—Post COVID-19: The New Guest Experience. The experts on the panel will share how to inspire guest confidence that hotels are safe and clean and how to win back guest business.
The tracker uses a baseline of self-reported consumer travel behavior that was collected 12 months prior to the pandemic breakout in March. Travel intentions subsequently are being collected at various time intervals to assess changes in intention. Both reach, representing the percentage of the population who plan at least one travel experience within the designated time frame, and frequency, representing the anticipated number of experiences for the designated time frames, are considered in the forecast. This data then is used to determine the trajectory of the expected time to return to “normal,” as well as whether there has been a significant upturn or downturn in travel intention from the previous wave.
“The forecast shows the continuing significant impact COVID is having on hotel occupancy,” said Rick Garlick, VP, strategy consultant, Magid. “Currently, the forecast suggests a 39 percent decline in occupancy for the next month. If the average occupancy at this time of the year (summer) is 70 percent, this would put current occupancy around 43 percent.”
“Many hotel companies are creating new forecast models for the remainder of this year and next without the benefit of insight into the mindset of the traveling consumer,” said John Fareed, chairman, Horwath HTL, America. “This data will allow hoteliers to better understand the customer's intentions and create marketing offers to consumers that will position them to survive and thrive this crisis.”
According to the most recent wave of research, conducted July 29 to August 2, 71 percent of consumers expect to next stay in a hotel 24 months from now. That is down from the baseline behavior of 89 percent who said so in March and the 74 percent who said the same in the beginning of June. Only 56 percent of consumers said they expected to next stay in a hotel a year from now, compared to 62 percent who said so in June and 79 percent who reported the same in March.
According to the most recent wave, consumers anticipate staying at hotels 7.26 times per year. That frequency is actually up from the June research, where consumers reported an intention of 6.74 times per year and from the baseline reported behavior of 6.58 times per year.
The data suggests a brighter outlook for vacation rentals, with travelers having a higher trust level than with hotels.
While vacation rentals are anticipated to be down for the short term, the Magid HTL Forecast Tracker suggests their recovery will be much quicker. While vacation rentals are currently forecasted to be down 64 percent for the last part of the summer, they are expected to return to normal in 12 months.
Airline travel intentions are paralleling hotel intentions, with the current forecast more pessimistic than in the previous wave. Within the next 12 months, air travel is expected to decline 31 percent, in line with the expected 29 percent drop in occupancy.
About The Author -