Loss of $21B in business travel to dampen hotel recovery
Report anticipates 23% shortfall in 2022 from pre-pandemic
By: TRD Staff
(iStock/Photo Illustration by Steven Dilakian for The Real Deal)
As hotels fight to recover from the pandemic’s ravages, a continued downturn of business travel will continue to harm the market.
Hotel revenue from business travel will remain 23 percent below 2019 levels in 2022, American according to a forecast from the Hotel & Lodging Association and Kalibri Labs reported by Bloomberg. The nationwide shortfall amounts to a projected $20.7 billion revenue loss when compared to three years ago.
Though leisure travel is forecast to exceed pre-pandemic levels, hotel revenue from business travel is projected to hit $69 billion this year, well short of 2019’s $90 billion mark. Still, the forecast is looking better than it did the previous two years, when hotels lost an estimated $108 billion in revenue.
Unfortunately for the sector, the forecast shows business travel isn’t expected to recover until 2024 at the earliest.
For some big cities, the hit will be even harder for the coming year.
In New York City, revenue from business travel is estimated to reach $2 billion this year, less than half of the $4.5 billion hotels made in 2019. In Chicago, projections call for $1.3 billion in business travel revenue, down 48.7 percent from $2.5 billion in 2019.
San Francisco will be feeling the most staggering effects among the major markets. The report projects only $762 million in business travel revenue this year, a precipitous 68.8 percent drop from three years ago.
Despite the tough blow continuing to come from a lack of business travel, there are still signs of optimism in the hotel market. More than $12.5 billion in hotel sales occurred in the first quarter, according to CoStar data, a six-year high for the first three months of the year.
Real Capital Analytics reported hotel values climbed 18 percent year-over-year in March and hotel sales prices are outpacing profits, signs of an optimistic outlook for the sector.
[Bloomberg] — Holden Walter-Warner