More than 70% of U.S. hotels may not survive pandemic
Va. hotel revenues continue decline
As COVID-19 cases continue to rise in the U.S. and travel restrictions are reinstated, the American Hotel & Lodging Association (AHLA) projects that 71% of hotels won’t survive another six months without federal assistance, according to recent survey results.
In Virginia alone, Virginia hotel revenues continued last week to stay well below pre-pandemic levels compared with last year, according to data from STR Inc., a CoStar Group division that provides weekly market data on the U.S. hospitality industry.
For the week of Nov. 8 through Nov. 14, hotel revenues in Virginia decreased by 47% and rooms sold declined by 29%, compared with the same week last year. The week prior saw a 53% decrease in revenue compared to 2019 and a 35% decline in rooms sold. Compared with last year, the average daily rate (ADR) paid for hotel rooms dropped 25% to $81.62, while revenue per available room (RevPAR) fell to $36.23, a 46% decline.
“With a significant drop in travel demand and seven in 10 Americans not expected to travel over the holidays, hotels will face a difficult winter,” AHLA President and CEO Chip Rogers said in a statement. “We need Congress to prioritize the industries and employees most affected by the crisis. A relief bill would be a critical lifeline for our industry to help us retain and rehire the people who power our industry, our communities and our economy.”
Hotel revenues and rooms sold declined in most markets in Virginia last week, compared with the same time frame last year. Compared with the same week in 2019, revenues fell 65% in Northern Virginia, 40% in Charlottesville and 23% in Hampton Roads. During the week of Nov. 1 through Nov. 7, revenues fell 71% in Northern Virginia, 45% in Charlottesville and 34% in Hampton Roads. The number of rooms sold in Northern Virginia is down by 47%, Charlottesville is down by 25% and Hampton Roads is down by 13%.
“Performance of the hotels in the commonwealth during this week was in general slightly better than last week,” Professor Vinod Agarwal of Old Dominion University’s Dragas Center for Economic Analysis and Policy said in a statement. “COVID-19 continues to have adverse impacts on this industry.”
Despite continued drops in revenue and number of rooms sold, Hampton Roads continues to fare well compared to national rates. Since the week of Sept. 6 through Sept. 12, it has had the smallest declines in both occupancy and RevPAR among the top 25 markets in the U.S. Williamsburg continues to be the hardest-hit locality in Hampton Roads, however, seeing a 43% decline in revenue last week.
Although Virginia showed slight improvements, the industry continues to struggle. The AHLA reports that 59% of U.S. hotel owners say they are in danger of foreclosure by their commercial real estate debt lenders due to COVID-19 and 52% say their hotel will close without additional aid from Congress.
“Every hour Congress doesn’t act, hotels lose 400 jobs,” Rogers said in a statement. “As devastated industries like ours desperately wait for Congress to come together to pass another round of COVID-19 relief legislation, hotels continue to face record devastation. Without action from Congress, half of U.S. hotels could close with massive layoffs in the next six months.”