It’s no secret that COVID-19 has impacted virtually every industry across the globe. Over the next few months, we will take a closer look at specific property types and discuss how they’ve been affected since the start of the global pandemic. Our first installment of this series will focus on the uncertainty surrounding hotels.
Hotels and COVID-19
The hospitality industry, specifically hotels, are among the hardest hit thus far. The reasoning is pretty straightforward: people aren’t traveling nearly as much, so they aren’t staying at hotels.
Early on in 2020, before COVID-19 became a widespread issue in the United States, hotel markets were expected to maintain a similar level of strength as we witnessed in 2019. Of course, that all changed in March when the initial shutdown took place. Months later, hotels are still feeling the impact of the virus. The east coast is a great place to look for evidence of this, because weather is usually the determining factor in the number of reservations, with sunny days and good weather typically driving summer vacation bookings. However, this year, although the weather has been nice for much of the summer, hotels are receiving far more cancellations than normal. On top of that, hotel capacity is also temporarily reduced to comply with social distancing measures.
Forecasting the Future for Hotels
Travel is going to return eventually, and hotels will recover from their current state, but how quickly they do so will depend on a handful of factors. As we move through recovery, expect a rise in vacations close to home. Families will be more likely to avoid air travel as restrictions remain in place, so we anticipate “drive-to” markets to be among the first to recover. Airport markets may take significantly longer as businesses and families continue to minimize their travel as much as possible. As restrictions continue to be reduced, however, there may be great opportunities to invest in hotels at modest prices with potential for growth.
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