For the week ending March 21, U.S. hotel occupancy fell to its lowest level ever recorded. Occupancy fell by 56% and average room rates fell 30%. Group (event) occupancy was down to 1%. And occupancy rates are likely even lower right now – we’ll just have to wait about a week to learn just how low.
- Occupancy: 30.3%
- Average daily room rate: $93.41
- Revenue per available room: $28.32
Declines were even greater in the top 25 markets, with occupancy 26.2% and rates dropping more than a third. In both San Francisco and New York only 17% of rooms were filled.
In February the U.S. unemployment rate stood at 3.5%. On March 6 I called a recession. Today we learned that there were 3.28 million new unemployment claims last week, five times the previous record, and “17 times higher than the previous record one-week jump.”
Many economists believe the downturn will be short-lived, because outside of an enforced lockdown (that has extended beyond travel to retail and public gatherings) there isn’t anything fundamentally wrong with the economy. In addition there’s both monetary and fiscal policy working to inflate things (though those actions may come with costs later).
My own view is that the recession in travel will be long-lasting. Restrictions are likely to remain in place on international travel, and we may see some restrictions in place domestically even as broad warnings lift. There will less discretionary income to travel, and businesses taking time to recover before sending employees back onto the road. However once we’re able to travel there will be plenty of empty rooms and low prices to lure people back.