The Hotel Market Will See a Full Recovery in 12 to 18 Months

“We are finally seeing tailwinds in the hotel industry,” Driftwood Capital’s CEO Carlos Rodriguez Sr. tells GlobeSt.com about the market recovery. He is anticipating a full recovery in the hotel market in the next 12 to 18 months, and it is welcome news considering that the hospitality market was the most badly impacted during the pandemic.

Renewed travel activity and demand for hotels is driving Rodriguez optimistic outlook. “To give you a sense of why we’re confident, several of the hotels in our portfolio—mostly leisure-oriented hotels in Sunbelt drive-to markets—are already exceeding 2019 performance metrics, which is really remarkable,” he says. “And many of our other hotels are forecasted to exceed 2019 performance later next year.”

For now, the travel market is still fragmented. Leisure travel has returned, but business travel will likely take longer to bounce back, according to Rodriguez. He also notes a new phenomenon called bleisure travel, a blend on business and leisure. “With increased flexibility on where and how we work today, people are blending business and leisure travel, extending their stay in hotels a bit longer,” he says. “Group business reservations in many instances is pacing better than 2019 but individual business travel will take more time. It really is a market-by-market issue.”

The swift recovery in the leisure travel market, even with new variants popping up, shows the resiliency of the sector. People want to get out and do things—so the industry is far from dead. “Travel is here to stay. Psychologically, people confronted their mortality these past two years, so there’s this roaring 1920’s ‘enjoy life while you can’ mentality that’s going to fuel continued demand for travel,” says Rodriguez, adding that increased disposable income from two years of built-up savings and several rounds of government stimulus has funded travel activity.

The rebound in travel is driving forecasts that hotel RevPAR will outperform against 2019 numbers next year. “At the same time the trend is more and more moving to creating experiences and memories with loved ones,” says Rodriguez. “This coupled with the need to visit clients to close deals and form stronger bonds between client and vendors after two years of only seeing people via Zoom creates pent up demand for the near future. Said trend bodes well for the travel industry.” And for hotel investors, too.