By Beth Mattson-Teig
CHECKING IN WITH
The hospitality market continues to recover faster than anticipated , but some sectors continue to lag and headwinds are gathering .
The hotel industry has proved to be far more resilient than many had predicted when travel came to a screeching halt in 2020 . Although the outlook is more positive than it was two years ago , developers and investors continue to see both challenges and opportunities ahead .
There is no sugarcoating the crash that hit the hotel market following the outbreak of the COVID-19 pandemic . The shutdown in travel was disastrous for owners , with a precipitous drop in revenue per available room ( RevPAR ) and property values .
Frankly , many owners didn ’ t know when a recovery would come — or if they would be able to survive until it did . Although business travel and group demand have been slower to recover , the industry has seen dramatic improvement in fundamentals .
“ We had predicted a longer recovery than what we experienced , but the market appears to be all the way back in terms of operations ,” says Michael C . Lady , CCIM , MAI , FRICS , senior managing director in the Indianapolis office of Integra Realty Resources . Occupancies are now near pre-pandemic levels and average daily rate ( ADR ) is above 2019 levels , which are both contributing to stronger RevPAR . “ As far as property values are concerned , we ’ re back to , if not exceeding 2019 levels ,” he says .
According to STR , a division of CoStar Group that provides market data on the hotel industry , the trailing 12-month RevPAR through June shows that the U . S . hotel market is 100 percent back to where it was pre-pandemic . The country reported an all-time high RevPAR of $ 108.64 , while occupancies of 70.1 percent were the highest since August 2019 .
20 COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE FALL 2022