Industry Update
Press Release 2 June 2020

Horwath HTL Industry Report: USA Hospitality Sector & COVID-19 impact

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Horwath HTL

By all accounts, the COVID-19 pandemic has wreaked near-term havoc on the U.S. economy in general and on the hospitality, tourism and leisure industries in particular. While the Fed Chairman and hotel industry leaders concur that there will be positive GDP growth in the third and fourth quarters of 2020, none believe we will get back to where we were quickly.

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The COVID-19 pandemic is a random event that has occasioned an impossibly sharp economic downturn and near-depression-level unemployment, the cause of which is neither an asset bubble bursting nor another more fundamental socio-economic reason, but rather a self-induced economic freeze that heretofore has been replete with travel bans, stay-at-home orders and other social distancing measures.

Predictably, businesses which rely on travel or leaving one's home and/or social interaction—businesses such as airlines, hotels, restaurants, bars, theaters, spectator sports, cruise ships, tour buses and the like, several of which are labor-intensive and operate on tight margins - have been among the hardest hit.

For example, hotel industry performance over the five-week period ended May 9 has been abysmal. Week 1 of this five-week period, the week ended April 11, saw occupancy plunge 45.1 percentage points to 21% from a year-end 2019 occupancy rate of 66.1%. For the week ended May 9, occupancy had rebounded by 9+ percentage points over April 11 to 30.1%.

Looking ahead to Q3 and beyond, industry prognosticators revised their forecasts downward and now anticipate that:

  • Occupancy for Y-E 2020 will be ±35.8%, down -45.8% from 2019, and will improve by Y-E 2021 to ±52.1%.
  • ADR for Y-E 2020 will be $102.83±, down -21.6% from 2019, and will improve by Y-E 2021 to $104.58±.
  • RevPAR for Y-E 2020 will be $36.84±, down -57.5% from 2019, and will improve by Y-E 2021 to $54.53±.

¹ Source: STR and Tourism Economics, as reported in Lodging Magazine May 18, 2020

About Horwath HTL

Horwath HTL is the world"s largest hospitality consulting brand with 45 offices across the world providing expert local knowledge. Since 1915 we have been providing impartial, specialist advice to our clients and are recognized as the founders of the Uniform System of Accounts which subsequently has become the industry standard for hospitality accounting. We focus one hundred percent on hotels, tourism and leisure consulting and have successfully completed over 16,000 projects.  If you have any questions, please contact James Chappell, Global Business Director at [email protected].

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Stephanie Henley
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