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CBRE Updates U.S. Lodging Forecast to Further Account for Delta Variant’s Impacts
CBRE Group, Inc. | October 12, 2021
Dallas, TX – October 12, 2021 – The COVID-19 Delta variant’s emergence and spread has hampered plans for group and business travel this fall and winter, spurring CBRE Hotels Research to temper its expectations in September 2021 for Q4 2021 U.S. lodging performance on a national basis. CBRE’s tempered outlook extends into 2022, given the likelihood that corporate travel budgets will remain constrained next year. Earlier this year, the lodging outlook had been brighter due to strong leisure demand boosting summer occupancy levels beyond expectations at U.S. hotels. But the emergence of the Delta variant sapped momentum from more lucrat...
Hotels Owners Interested in Interest
Robert Mandelbaum | October 1, 2021
By Robert Mandelbaum, Mark K. Owens The decline in the operating performance of U.S. hotels during 2020 has been well documented. According to the results of CBRE’s 2021 edition of Trends® in the Hotel Industry, total operating revenue during the year declined by 62.2 percent, which resulted in an 82.6 percent drop in gross operating profits (GOP). Similar to the decline in total operating revenues, the 30-day average annual LIBOR rate declined by 68.9 percent. 30-day LIBOR is historically the benchmark rate used by lenders for floating-rate loans, which are a preferred loan type of most institutional hospitality investors. Dec...
Operating Observations From 2020
Robert Mandelbaum | March 29, 2021
By Robert Mandelbaum In 2020, U.S. hotels suffered the worst year of operating performance since CBRE began tracking profitability in 1938. During the year, the average hotel in CBRE’s monthly survey of U.S. operating performance experienced a 78 percent decline in Gross Operating Profits (GOP) and achieve the lowest GOP margin (19.7%) over the past 82 years. While hotels may have earned enough revenues to cover their direct operating expenses, it is likely that the average hotel did not generate any cash from operations to cover their debt service. To track operating performance during 2020, CBRE collected monthly operating state...
US Hotel Industry Forecast Adjusts in Response to COVID-19 Winter Surge and Anticipation of Vaccines
CBRE Group, Inc. | December 14, 2020
Dallas – December 14, 2020 – The recent surge in COVID-19 infections has dampened expectations for U.S. hotel performance through the first half of 2021, but news of effective vaccines has bolstered projections of U.S. lodging industry recovery beginning in earnest during the second half of next year, according to CBRE’s latest hotel forecast. According to the recently released Q3 2020 edition of Hotel Horizons®, CBRE Hotels Research is forecasting an average national occupancy level of 44.4 percent during the first half of 2021. This measure increases to 55.7 percent during the year’s second half. “The increased spread of th...
The Owner’s Obligation – Cash
Robert Mandelbaum | August 17, 2020
By Robert Mandelbaum The COVID-19 virus has had an extreme negative impact on the U.S. lodging industry. According to CBRE’s June 2020 edition of Hotel Horizons®, lodging demand in the U.S. will decline by 37.0 percent in 2020. This will cause a 38.0 percent drop in the national occupancy level, along with a 22.5 percent fall in average daily room rates (ADR). The net result is a projected 51.9 percent fall off in revenue per available room (RevPAR) for the year. Using historical data from the CBRE Trends® in the Hotel Industry database of operating statements, the most likely consequence of a 51.9 percent RevPAR decline is a G...
COVID-19’s Potential Lasting Impact on Fixed vs Variable Hotel Expense Ratios
CBRE authors | July 22, 2020
By Mark VanStekelenburg, Kannan Sankaran, Andy Hartley and Vanessa Gonzalez As a result of COVID-19, hotel operators have been forced to make tough decisions, including the most basic one on whether to keep the lights on. Many were required to close their doors after municipal mandates were put in place and some decided to remain open, despite record-low occupancy levels, to house pandemic-related first responders and other essential personnel related to the fallout from the spread of coronavirus, largely in place of more traditional sources of demand during “normal times”. Depending on the type of hotel and its service level, the deci...
CBRE Hotels Research Forecasts Full Demand Recovery by Late 2022
CBRE Group, Inc. | May 21, 2020
Revenue per Available Room Recovery Expected to Push Into 2023 Atlanta – May 21, 2020 – After suffering the greatest performance declines in the history of the U.S. lodging industry during 2020, the nation’s hotels will benefit from what is expected to be a relatively rapid economic turnaround in 2021 and 2022, according to the June 2020 edition of CBRE’s Hotel Horizons forecast report. CBRE foresees demand for U.S. lodging accommodations returning to precrisis levels in the third quarter of 2022. However, a lag in ADR (average daily rate) growth will stall the recovery in RevPAR (revenue per available room) until 2023. “Th...
Operating Performance at Low Occupancy Levels
Robert Mandelbaum | April 17, 2020
By Robert Mandelbaum Since January 2020, CBRE Hotels Research has been analyzing the impact of the COVID-19 virus to understand how the societal and economic impacts of COVID-19 will influence the performance of U.S. hotels. Initial guidance came in the form of updated Hotel Horizons® forecasts of occupancy, ADR, and RevPAR for the nation’s chain-scales, location categories, and 60 major markets. Concurrently, we relied on the historical relationship between declines in RevPAR to estimate the potential decreases in profits. For example, a 20 percent decline in RevPAR for a full-service hotel during 2009 resulted, on average, in a...
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