Global RevPAR Still Won’t Reach Pre-Pandemic Levels Until 2025

Despite more companies opening their borders to foreign travelers, Fitch Ratings is standing by its earlier prediction for global travel revenue per available room (RevPAR) to reach 2019 pre-pandemic levels by 2025 as vaccinations increase, safety concerns ease and business travel improves, 

Fitch said it is not moving the date forward as worldwide vaccination remains low at 32%, though up from 10% at the end of June.

The company said lower price-point economy and the midscale segment outperforming upscale segments is expected to continue while international and corporate travel remain weak.

There has been some appetite in the corporate community to resume some of the non-essential business trips and convention activity that was curtailed during the pandemic, said Fitch.

But the firm cautioned about the trend toward remote work, the success of video conferencing during the health crisis and post-pandemic cost-saving programs that will likely result in a slow recovery in business travel.

International leisure travel stands to stay basically still, said the company, as home country staycations are likely to remain popular among travelers in 2021.

However, Fitch expects globally diverse European lodging companies to benefit more from border re-openings than domestic US hotel issuers, whose sales are primarily driven by regional and leisure traffic.

Many countries Europe, Asia, the Middle East, Africa and Latin America have already reopened their borders to fully vaccinated Americans, with the UK being one of the latest in early August.

The US has announced plans to allow foreign nationals from certain countries in Europe, Asia, the Middle East, Africa and Latin America to enter the US with proof of vaccination and a negative Covid-19 test taken three days prior to air travel beginning in November.

Yet reopening the world to international travel still has a ways to go, Fitch points out, as dozens of other countries continue to ban noncitizens, and the travel status of those with open borders can change suddenly, due to uncertainty regarding the course of the pandemic as new variants spread.

According to the World Tourism Organization’s Destination Tracker, 45% of Asia, 28% of Europe, 21% of the Middle East, 13% of the Americas and 4% of Africa had restrictions on entry for air travel in place as of Sept. 21.

The restrictions on travel from abroad to the US was cited as a factor by the National Association of Realtors for the decline in international purchases of US residential properties during the pandemic to its lowest level in a decade.

From April 2020 to March 2021, international buyers purchased 107,000 US residential properties totaling $54.4 billion, according to the National Association of Realtors. Those dollar and sales figures were down 31% and 27%, respectively, from the previous year.

In addition, the international purchases of US homes from April 2020 to March 2021 hit the lowest volumes since 2011. International buyers accounted for 2.8% of the $5.8 trillion in existing-home sales during this period.

“The big decline in foreign purchases of homes in the US in the past year is no surprise, given the pandemic-induced lockdowns and international travel restrictions,” said NAR Chief Economist Lawrence Yun.