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The US hotel industry reported the highest room rate in July 2022 at a nominal level. According to STR data, key performance indicators for the industry include:
- Occupancy: 69.9%
- ADR (Average Daily Rate): $159.08
- RevPAR (Revenue per Unit): $110.73
Using June 2019 as a reference point, the industry reported a -5.4% change in occupancy, a +17.5% change in ADR and a +11.2% change in RevPAR per month. If inflation is ignored, the hotel industry has already recovered in terms of ADR and RevPAR, which are higher than pre-pandemic levels. This recovery is governed by a lien.
However, there is no real sense of recovery outside of business travelers.
AHLA forecasts that business travelers will account for 43.6% of hotel industry segment revenue in 2022, down from 52.5% in 2019. That’s a $21 billion difference. Although there are many “flash” (business + leisure) travelers in the market, the industry still needs business travelers to support the recovery.
When will the business travelers return?
It depends on how you see the market. Earlier this year, corporate travel managers noticed a trend in booking activities for business travel. They were optimistic about the outlook. Global business travel spending is projected to grow 34 percent year over year to $933 billion by 2022. Still, this is a far cry from the $1.4+ trillion spent on business travel in 2019.
Others are not positive about the market. The most recent update suggests business travel spending may not recover to pre-pandemic levels until 2026, two years later than the previous forecast. Such adjustments are made keeping in mind inflation, labor shortages and geopolitical issues.
When do you expect to see the return of business travel? How will business travel change from pre-pandemic to post-pandemic?
Links Kwok
Professor at Collins College of Hospitality Management, Cal Poly Pomona.
CAL POLY POMONA
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