Imminent Herd Resiliency To Enable Lodging to Resume Recovery

The vaccination reacceleration across the country as a result of Delta variant concerns from COVID-19 should enable the United States to reach herd resiliency (65 percent+ of the adult population being fully vaccinated or previously infected) by early September, according to Lodging Analytics Research and Consulting (LARC)’s U.S. Lodging Industry and Outlook – September 2021 report.

Markets with a greater concentration of hotel demand from the leisure segments and less from international and in-house groups are likely to recover relatively faster.

That positive vaccination rate trend leads LARC to forecast that these demand segments of the hotel business will recover in this order: drive to leisure, fly-to domestic leisure, domestic business travel, large citywide conventions, small in-house group, international business travel and international leisure.

Summer Recovery Good, Not Great

The U.S. had seemed poised to begin a massive economic and lodging recovery this summer. “While the growth was remarkable (2Q U.S. RevPAR was up 160.4 percent), especially related to leisure travel, the proliferation of the Delta variant has increased reluctance to return to some sense of normalcy,” LARC reported.

The U.S. is still part of a global ecosystem, it contends. “Many experts believe that the U.S. will maintain a level of risk until the world vaccination rate approaches that 65 percent level, which is not likely to occur before mid-2022.”

COVID-19’s impact on the lodging industry will continue to evolve, rather than disappear, the group said.

“While we expect a return to the office to materialize this fall, it will likely be in the form of a more hybrid/flexible structure until vaccines are available for children or COVID-19 is no longer a threat.

“We expect disruption from COVID-19 to moderate going forward, but the negative impact on urban and gateway markets will persist for some time. As a result of these factors, we have delayed our acceleration in group and corporate lodging demand by a couple months, negatively impacting our 4Q-2021 outlook.

However, the robust leisure travel recovery experienced during the summer months exceeded even our lofty expectations, “which will more than offset the modest pullback we now forecast in 4Q-2021, driving a more positive 2021 RevPAR outlook than last quarter,” LARC said.