LW Hotel Advisors (LWHA) recently released its third-quarter U.S. lodging market update. According to Daniel Lesser, President and CEO, the U.S. lodging industry has shifted dramatically over the past 12 months. Looking back to this time last year, the world was fiercely battling the Coronavirus, virtually weaponless without anything other than masks and social distancing measures. We are now roughly six months into a global vaccination campaign, with cases and death rates much lower in most parts of the world.
The recovery in the U.S. hotel industry until now has been largely driven by leisure demand as lodging facilities that serve vacationers, weekend travelers and day trippers are performing very strongly and, in some cases, charging higher average daily rates and filling more rooms than prior to the pandemic. Demand drivers are anticipated to change during the second half of this year as post-Labor Day corporate travel should increase and leisure travel will slow with schools reopening. Furthermore, the predicted death of urban centers is proving to be greatly exaggerated as the pendulum of outbound flight from 24/7 urban cores is swinging back. The availability of a vaccine has made city workers and dwellers less fearful of infection and anxiety to be in crowded environs.
The U.S. lodging industry is reemerging with dramatic transformations that may permanently alter the sector’s pre-pandemic business model and create higher margin businesses. Owners and operators are touting potential savings and increased efficiency from reduced hotel workforce labor and costs on services such as housekeeping, food and beverage. Similar to the airline industry’s a la carte approach, the hotel industry is attempting to move guests toward an opt-in choice for various services, such as daily room cleaning.