From the desks of the Hotel News Now editorial staff:
- Demand recovery could take four years
- US sets new COVID-19 records
- A closer look at drive-to demand
- Fed sets new rules for banks
- Posadas signals plan to stop debt payments
Demand recovery could take four years: The latest forecast from STR and Tourism Economics projects the U.S. hotel industry won’t reach historical average occupancy levels until 2023, and it could take even longer for rate to recover, according to a news release. STR is parent company of Hotel News Now.
The latest projections call for a 37.1% drop in occupancy to 41.6% for full-year 2020 compared to 2019, with a 21.4% drop in average daily rate to $103.04 and a 50.6% drop in revenue per available room to $42.83.
“With lower occupancy levels, and the influence of discounting as hoteliers compete for market share, ADR could show a slower recovery timeline even with more normalization each quarter—we improved our 2021 ADR projection from +1.7% to +5.2%,” said STR’s SVP of lodging insights Jan Freitag. “Despite this better growth rate next year, we do not see ADR recovering to pre-2020 levels in the next five years.”
U.S. sets new COVID-19 records: The U.S. set a new daily record for new COVID-19 cases, NPR reports based on data from Johns Hopkins University & Medicine Coronavirus Resource Center. A total of 40,401 new cases were recorded on 25 June, significantly more than the previous record of 36,291 cases on 24 April.
Health officials are also now saying that they believe the reported cases represent only a small fraction of the virus’ actual spread.
"Our best estimate right now is that for every case that was reported, there actually were 10 other infections," said Robert Redfield, the director of the CDC.
A closer look at drive-to demand: Drive-to leisure travel makes up the majority of hotel demand for the time being, and hoteliers are taking a closer look at what it is and how to make the most of it, reports HNN’s Dana Miller.
Scott LePage, president of the Americas region at Wyndham Hotels & Resorts, said his company considers “drive-to” as any destination a traveler can reach by automobile within a day. That distance seems to be expanding.
“There’s a bit more willingness to drive a little further than normal this year, if that means getting both peace of mind and the vacation (guests) want,” he said.
Fed sets new rules for banks: The Federal Reserve has set new restrictions on banks’ dividends and share buybacks as worries grow about how well capitalized they are to weather a prolonged recession, Bloomberg reports.
Fed officials said banks performed well in recent stress tests but “a separate review of the effects of the coronavirus on the economy and financial system uncovered potential risks that left the fate of their dividends in question.”
The new rules cap dividends at second-quarter levels and limit payouts based on recent earnings.
Posadas signals plan to stop debt payments: Officials with Mexico City-based Grupo Posadas said they will forego a scheduled 30 June interest payment of about $15.5 million to prioritize funding operations, according to a news release from the company.
Company officials claim the move is being made “to maximize its financial flexibility in the near term and to better manage the unprecedented challenges affecting the hospitality industry in Mexico as a result of the COVID-19 pandemic.”
Compiled by Sean McCracken.