The global threat from the coronavirus pandemic will eventually pass and hard-hit hoteliers will begin to see occupancies rise. Green shoots are sprouting for certain markets, primarily drive-to beach locations, budget hotels and smaller, limited service interstate highway properties. Hotels that are not seeing demand include corporate, airport and convention properties.
“A survey of our hotel borrowers in April and May found average occupancies of 10%-30%,” commented Michael Sneden, Executive Vice President at ValueXpress. “Most were impacted by government orders to restrict occupancy to 50%, stay-at-home orders and corporate travel cutbacks.”
As the U.S. government reopened the economy at the end of May, the first hoteliers to benefit were drive-to resort/beachfront access properties as people tired of being shut in flocked to open beaches. “We have clients who own hotels in proximity of Florida gulf beaches. They have been 100% occupied since the state reopened on June 1st,” said Sneden. “Another client who owns hotels on Galveston Island and Port Aransas near Corpus Christi, Texas also reports 100% occupancy.”
Budget hotels are also faring better, as contractors come back to work and travelers look to the exterior-corridor design typically found in budget hotels as they minimize interaction in hotel public spaces.