U.S. Hotels Viewpoint – An Updated 2020 Outlook – By Jamie Lane – Senior Managing Economist Econometric Advisors



The lodging sector will face two headwinds: a contraction in overall economic activity and the need for social distancing, which encourages staying at home or in settings with few other humans; and not traveling. This will cause a severe decline in lodging demand in the U.S., as it has in other countries. CBRE estimates that RevPAR will decline 37% in 2020, with a contraction of more than 60% in Q2.

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U.S. Hotels Viewpoint – An Updated 2020 Outlook



CBRE

Economic conditions are deteriorating quickly and according to Oxford Economics, the U.S. economy is in recession. Oxford predicts that, ‘the coronavirus pandemic will lead to a profound, pervasive, and persistent, but not permanent reductions in activity, with widespread cuts in social spending, severe disruptions to supply chains, and major interruptions in travel and tourism activity.’

CBRE expects GDP growth will slow to 0.4% in 2020, down from our previous estimate of 1.9%. The COVID-19 outbreak will cause a sharp drop in economic activity in Q2. As early as Q3 2020, activity will begin to stabilize and a recovery is expected to be underway by Q4. Employment is already contracting with service sector jobs disappearing as many cities restrict social interaction. Governments throughout the world are implementing monetary and fiscal stimulus to try to prevent a more long-term global recession. Our current expectations are that this stimulus, as well as pent up demand, will lead to a substantial rebound in economic activity in 2021.

The lodging sector will face two headwinds: a contraction in overall economic activity and the need for social distancing, which encourages staying at home or in settings with few other humans; and not traveling. This will cause a severe decline in lodging demand in the U.S., as it has in other countries. CBRE estimates that RevPAR will decline 37% in 2020, with a contraction of more than 60% in Q2. Prior to the spread of COVID-19 into the U.S., we had forecasted a 0.1% decline in RevPAR.

Key Findings:

  • CBRE expects GDP growth will slow to 0.4% in 2020.
  • U.S. RevPAR will decline by 37% in 2020, with a contraction of more than 60% in Q2.
  • Demand will decline by 28% in 2020; ADRs are expected to decline 11% in 2020.
  • The most complex constraint impairing travel comes from social distancing efforts and travel or group gathering restrictions on global populations.
  • Properties that primarily cater to discretionary travel will be affected most, i.e. luxury, upper upscale, urban, airport, and resort properties.

Click here to read the full report.

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© 2020 Hotel News Resource



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