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Despite a recent boom in airline traffic and leisure travel, 21 of the U.S.’s 25 premiere hotels are doing recession- or depression-level business, according to a new report by the American Hotel & Lodging Association (AHLA).
Most flagship hotels are located in pricey urban centers and have depended on business travelers, conventions, meetings, and special events for most of their profits.
However, business travel has not returned and is not likely to do so until at least 2023, the AHLA predicted.
Most companies and analysts say that corporate road warriors will not begin traveling again until later this year; some companies have permanently slashed their travel budgets, having discovered that tele-meetings are just as effective in many cases.
Due in significant part to that loss of business travelers, urban hotels took in only 52 percent as much revenue from guest-room bookings in May compared to the same month in 2019, according to the AHLA.
In New York City, 2020’s economic collapse permanently closed 200 of the city’s hotels, wiping out a third of all hotel rooms there.
“While some industries are starting to rebound as COVID restrictions ease across the country, the hotel industry is still in a recession, with the hardest-hit markets in a depression,” AHLA CEO Chip Rogers said in the statement.
Noting that hotels are the only segment of the leisure and hospitality industry not to receive direct federal aid during the 2020 crisis, Rogers again called on Congress to pass the pending Save Hotel Jobs Act, which would support hotel payrolls until travel returned to pre-crisis levels.
TRENDPOST: In our 9 September,2020, article, “Bid Farewell to the Business Travel Economy,” we noted that Citigroup analysts have predicted a permanent 25-percent reduction in business travel volume.
We also quoted Gary Kelly, Southwest Airlines’ CEO who said business travel could “languish for a decade” and reported that Ed Bastain, CEO of Delta Airlines, said in July 2020 that he no longer expects business passenger volume ever to return to 2019 levels.
TREND FORECAST: The hospitality and tourism sectors will continue to decline with more bankruptcies and greater consolidations. In travel and other industries, as the “Greatest Depression” worsens and more companies go out of business, fewer companies will control larger shares of market sectors.
The loss of city-center hotels will combine with empty office space (see related story) to worsen the fiscal plight of city governments that rely on property taxes to fund public services.