Industry Update
External Article29 September 2020

Some Never Recover: ADR Cycles In The US Hotel Industry

While the U.S. hotel industry at large can recover and thrive following a recession, that does not hold true for each individual property.

share this article
1 min
HotelNewsNow.com (HNN)

CHICAGO and BROOMFIELD, Colorado - Hotels always recover from economic downturns, right? Wrong.

Advertisements

While it is true the U.S. hotel industry in aggregate has always rebounded from past recessions, this trend masks the fact that each cycle has winners and losers. Many hotels never recover. The U.S. hotel industry, on whole, has set new records for total revenue and average daily rate in each historical economic cycle since this data has been collected. The following figure illustrates this upward trend, showing aggregate U.S. hotel ADRs achieving new peaks in each of the past five economic cycles.

However, many individual hotels never recover after a recession. During the past economic cycle, approximately one in 10 U.S. hotels never rebounded to the ADR levels they achieved in 2008. During the Great Recession of 2009, aggregate ADRs declined significantly in the U.S., but by 2013, the industry had achieved a new ADR peak.

This recovery in aggregate performance obscures the fact that approximately 10% of U.S. hotels never recovered to their prior ADR peaks, even by 2019. We expect a similar outcome following the current pandemic and economic recession of 2020.

Hotel Appraisers & Advisors (HA&A) collaborated with STR to evaluate 7,530 U.S. hotels that maintained the same brand and chain scale during the U.S. economic cycle spanning from the 2008 peak through the subsequent peak in 2019. Of this sample, 6,785 hotels recovered to their nominal 2008 ADR peak levels by 2019. However, 745 hotels in our sample never got back to their peak ADR levels, even in nominal dollars.i

STR is the parent company of HNN.

Read the full article at HotelNewsNow.com (HNN)

Latest News
Advertisements