Page 8 - NBIZ Magazine December 2020
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Convention activity is also critical            2020 Hotel Performance by Type of Hotel
        to the hotel industry. Houston conven-  Year-to-Date June 2020 Compared to Year-to-Date June 2019
        tions lost over 500,000 room nights in
        2020 due to cancellations caused by
        Covid-19. The good news is that 92% of   Type of Hotel   Occupancy            ADR             RevPAR
        all Covid-19 cancellations have been
        rebooked. 2021 will be a transition    Upper-Priced         -53.3%            -5.2%            -55.8%
        year with groups needing more space
        for social distancing and estimated
        attendance down 40% to 50% due to       Mid-Priced          -41.4%           -11.2%            -48.0%
        the fear of meeting in person. 2022 is
        shaping up to be a strong convention   Lower-Priced         -15.8%           -17.3%            -30.4%
        year with the hope of returning to pre-
        COVID-19 levels by 2024.                   Total            -37.6%           -16.9%            -48.1%
           While some U.S. markets will see a
        V-shaped recovery, Houston will likely
        experience a U-shaped recovery due to   Source: Kalibri Labs
        the double whammy of both Covid-19
        and its impact on the energy industry.   • Business activity gets back on track   impacted. For Average Daily Rate
        The year 2020 will be one to forget; we   by mid-2021.                   (ADR), it was just the opposite with
        never want to see THAT again. 2021   • Non-essential US travel is allowed.  upper-priced hotels being impacted the
        will be a year of transition since we                                    least and lower-priced hotels losing the
        have no idea when the uncertainties    The Houston MSA hotel market      most rate. Overall, upper-priced hotels
        will become more certain. Economic   began to decline in March 2020 due to   experienced the most loss in profitabil-
        patterns for 2022 through 2024 indi-  Covid-19, dropping from 65% occu-  ity, which is measured by the Revenue
        cate a pattern similar to pre-COVID-19   pancy in February to 42% in March.   Per Available Room (RevPAR). The
        years; a slow steady return to normalcy   The market hit bottom in April at 25%   above table shows the percent change
        by 2024.                             and began to slowly increase to 45% in   in occupancy, ADR, and RevPAR for
                                             September, partially driven by hotel   June 2020 compared to June 2019.
        Houston Hotel Market Forecast        demand generated by Hurricane Laura   Another factor that affects hotel per-
           It is difficult to estimate the exact   relocations from Louisiana. With   formance is the amount of new supply
        effect of the pandemic on hotel demand   occupancy leveling off at 35% to 40%   being added to the market. Unfortu-
        until we know when business and      for the remainder of 2020, occupancy   nately, there were a lot of new hotels
        “non-essential” travel will resume.   is estimated to average 40% for 2020.   under construction when Covid-19 hit.
        Therefore, the Houston hotel market   (Occupancy is defined as the number   All of these hotels continued construc-
        forecast is based on the following   of hotel rooms occupied divided by the   tion, but the opening dates tended to
        assumptions:                         total number of rooms available.)   be delayed due to the pandemic. All
        • No significant surge in Covid-19     Occupancy at upper-priced hotels   totaled, there are approximately 2,300
          cases occurs.                      was hit the hardest, followed by    new hotel rooms opening in 2020 and
        • A vaccine is available by the end of     mid-priced hotels, with lower-priced   2,000 in 2021. The good news is that,
          2020 and distributed by mid-2021.  (economy) hotels being the least    once these rooms are open, very little

                                            Houston Hotel Market Forecast

                             2019           2020           2021           2022           2023           2024

         Occupancy           62%            40%            50%            58%            60%            63%

         ADR                  --           -20.1%          8.2%          10.9%           5.9%           3.7%

         RevPAR               --           -48.4%         35.3%          28.6%           9.5%           8.9%

         Source: McCaslin Hotel Consulting, LLC

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