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COVID Briefs: U.S. occupancy up | What’s ahead for the UK?

U.S. occupancy notably up

Thanks to a travel boost leading into the New Year’s holiday, U.S. weekly hotel occupancy improved noticeably from the previous week, according to STR’s latest data through January 2. 

December 27, 2020 through January 2 (percentage change from comparable week in 2019/2020):

Occupancy: 40.6% (-17.2%)

ADR: US$107.93 (-21.5%)

RevPAR: US$43.81 (-35.1%)

Hotel demand jumped in week-over comparisons while TSA checkpoint counts showed five days with more than 1 million passengers. Substantial hotel demand growth is not expected to continue as leisure travel once again dissipates after the holidays. 

Aggregate data for the top 25 markets showed identical occupancy (40.6%) but higher ADR (US$112.83) than all other markets. Among the top 25 markets, Miami/Hialeah, Florida (69.2%) saw the highest occupancy level. Top 25 markets with the lowest occupancy levels for the week included Minneapolis/St. Paul, Minnesota-Wisconsin (24.2%), and Boston, Massachusetts (28.2%).

What’s ahead for the UK? 

What will the New Year likely bring to the U.K. hotel industry? According to HVS’ Russell Kett, that depends on how swiftly additional support for that industry comes. Some of his key concerns include: 

  • Government-led support for the hotel and wider hospitality sector has been a welcome shot-in-the-arm – the furloughing of many staff, business rates holidays and soft loans. However, these are time bound and hotel businesses will need to make crucial decisions in early 2021 that will impact their survival. As hotel businesses come under increasing financial pressure, many of those now furloughed until April 2021 will be let go in an attempt to reduce operating costs, thereby boosting the unemployment statistics. UK Hospitality estimates that 660,000 jobs have already been lost.
  • For hotels and the wider U.K. hospitality sector, 2021 is going to be very tough. While any eventual growth in top-line revenues over 2020 levels will be a cause for celebration, operating profits will be anaemic and less than half of 2019 levels in the provinces and around a third of 2019 levels for London hotels. When fixed costs are then deducted, many operations will be loss-making and will experience negative cash-flow until strong revenue gains can be made.
  • Independent hotel businesses with constrained financial resources or liquidity will be hardest hit. Larger hotel groups and owners with capacity to inject additional funds will be less at risk. Smaller independent operations that have a more hand-to-mouth existence will be at particular risk.

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