"Revenge travel" fuels hotel sector's speedy comeback
"Revenge travel" — i.e., making up for trip time lost during lockdown — is here.
Why it matters: The result is a speedier comeback for the beaten-down hotel industry that few predicted.
Driving the news: New York City hotel rooms last weekend were 72% occupied, Mayor Bill de Blasio said Tuesday.
- "The expectation was ... how many years and years and years would it take to recover? Well, guess what? The recovery is happening a lot quicker than anyone imagined," de Blasio said.
Flashback: The pandemic forced the greatest downturn the hotel industry has ever seen.
- The biggest players piled on debt, laid off workers and slashed costs. Others took advantage of paused loan payments and small business aid.
What's happening: Revenue per available room — a key gauge of the hotel industry's health — in a group of resort-area hotels (places like Key West or Miami) are above 2019 levels, UBS analyst Robin Farley wrote Wednesday in a note to clients.
- America's hotel room occupancy (83%) was the highest since October 2019 during Memorial Day weekend, according to hospitality data firm STR.
But, but, but: For some hotels, complete recovery is out of reach until business travel and events are back in full force.
- Marriott, Hilton, Hyatt and Host get anywhere from 60–80% of their business from corporate travelers or event-related guests, says Jim Dunn, a leisure analyst at CreditSights.
- "Investors are looking at Labor Day as sort of a demarcation for when we'll start to see the next leg of recovery in corporate travel," says Dunn.
What to watch: The industry is at the center of the worker shortage debate — a problem that could hamper its recovery.
- "If you can't find enough housekeeping staff to clean all the rooms ... you can't rent the rooms the next night," says STR's Alison Hoyt.