There is a light at the end of the long and dark tunnel for the hotel market. A new report from CBRE forecasts full recovery of national hotel occupancy by 2022 and of average daily rate by 2023. While this illustrates a long recovery cycle, it also is an indicator that the hotel market will rebound in the near-term. San Diego is well positioned to outpace the US market in rebounding, with full recovery predicted in 2022.
“Overall, the economy was in really good shape before the recession hit. Occupancy was at an all-time high, so the fundamentals are still there once people can start traveling again,” Brandon Feighner, managing director of CBRE Hotels’ Advisory, tells GlobeSt.com. “We think that San Diego is better positioned than most given the abundance of leisure travel and attractions. Two-thirds of leisure travel in California is from Californians. We are starting to see that early return as things are starting to open up.”
Feighner’s team has looked at past recessions and global events that impacted travel to make these predictions, finding that leisure travel will return first, followed by corporate travel and finally large group travel. “We are looking at past trends over seven or eight different cycles, and we are looking at data coming out of different countries,” says Feighner. “With any recovery within the hotel industry, it is going to be heads and beds first. Occupancy is going to be what comes back first, and then rate will return in earnest when corporate travel resumes. Big group travel will be the last piece.”
There are many predictions that businesses will permanently shift to work-from-home models, which will negatively impact both office leasing and business travel for hotels, but Feighner says that those fears are exaggerated. “The demise of business travel rating is overrated. You can’t do everything over zoom,” he says. “I think there will be hybrids in the short term with smaller meetings, but getting together and meeting with a group will come back. Once the uncertainty has dissipated, I think there will be a recovery.”
In terms of room rate, he has yet to see a significant fall because demand is hampered by fear and because many hotels have remained shuttered until recently. “It is uncertainty and fear that is keeping people from traveling, so deep discounting won’t assuage those fears,” says Feighner. “In the short term, demand is down so far across the board, and a great majority of the demand in San Diego is discretionary. So, the market isn’t as dependent on business travel than L.A. of San Francisco.”
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June 29, 2020 at 03:00PM
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San Diego Hotel Market Will Rebound in 2022 - GlobeSt.com
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