US Hospitality Directions: November 2020

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Significant spike in daily COVID-19 cases expected to prolong recovery of the US lodging industry

Continued political uncertainty leading up to the presidential inauguration, the speed of the business traveler's return after a vaccine, and the length and severity of a resurgence of the virus in Q4 and into 2021 are impacting lodging's recovery in the US. In our May edition, we had assumed the then consensus view that the daily number of new COVID-19 cases in the US peaked in late April. We now know this did not occur, and that the current daily number is over four times that level. This has significantly impacted the recovery timeline. We currently expect annual occupancy for US hotels this year to drop to 44%, and average daily room rates to drop 21%, with resultant RevPAR declining 47% from last year. RevPAR in 2020 is expected to fall to a level not seen since 1996.

"The significant increase in daily COVID-19 cases across the country is troubling and expected to prolong recovery for hotels."

Warren Marr, US Hospitality & Leisure Managing Director

Trends and highlights

  • It has been an uneven recovery, with destinations reliant on business, group and international demand suffering the most. Continued uncertainty and flexible booking policies are resulting in the majority of guests booking within 24-48 hours of arrival, straining forecasting and staffing models.
  • As Federal aid and temporary forbearance relief runs out, industry leaders now fear another wave of re-closures, with office reopenings being pushed into 2021, delaying the resumption of business travel and group demand that typically compensates for slowed leisure travel post-Labor Day.
  • In 2021, temporarily closed hotels continue to reopen and demand growth builds as the economy continues to open back up after a vaccine becomes widely available (currently assumed in 2H 2021). Occupancy and ADR decline in Q1 on a tough prior year comp (January and February 2020 were pre-pandemic) and then see a strong increase over an easy prior year comp in Q2 through 4, resulting in a year-over-year RevPAR rebound of 19%.

RevPAR percent change, US and chain scales

RevPAR percent change, US and chain scales

Our outlook for 2020 anticipates

Revised outlook anticipates

About Hospitality Directions

PwC Hospitality Directions US is a near-term outlook for the U.S. lodging sector, commonly used by industry decision-makers and stakeholders to better understand the impact of policy and other macro-environmental factors on the sector’s operating performance. Our outlook includes metrics for the overall sector as well as for the chain scales, and is used by our clients for

  • strategic planning and capital allocation purposes
  • demand and supply
  • occupancy
  • average daily rate
  • revenue per available room

Contact us

Scott Berman

Scott Berman

US Hospitality & Leisure Practice Leader, PwC US

Warren Marr

Warren Marr

US Hospitality & Leisure Managing Director, PwC US

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