LightBox Report: Finding Signs of Life in the Hospitality Industry
Cautious optimism for the hospitality industry. This is the theme of LightBox’s latest research report.
LightBox, a provider of due diligence, risk management and workflow solutions for the commercial real estate industry, recently released its Q2 2021 Investor Sentiment Report. And the good news from the story? Investors and their advisers see promising economic indicators that could help accelerate the recovery of the US hotel sector.
That doesn’t mean, however, that this sector doesn’t yet have a long way to go before reaching investor interest levels in 2019. The COVID-19 pandemic has devastated the hospitality industry. And hotel owners are still eagerly awaiting the return of business travelers. Until they do, the hospitality industry will struggle.
âThe commercial real estate industry is skillfully facing a complex set of challenges while seeing many positive signs of recovery and renewal in mid-2021,â said Tina Lichens, senior vice president of brokerage operations for LightBox .
âThe hospitality industry is poised for continued growth and transformation, but it is also the most vulnerable to continued upheaval as the market stabilizes and investors decide which asset classes can generate strong returns at long term. “
The sentiment report found that Midwestern markets are seeing increases in hotel employment. This is a good sign for the industry. According to Bureau of Labor Statistics research for May 2021, employment in recreation and hospitality increased over the past year by 58,600 in Minneapolis-St. Paul, Minnesota; by 20,100 in Milwaukee, Wisconsin; and by 11,100 in Des Moines, Iowa.
Experts in the hospitality industry are already seeing a strong summer vacation season. All of those summer road trips help the industry.
This is the good news. The bad news? Business and convention travel is still on the decline. And this business is more important to the profits of much of the hospitality industry.
âWe have to be careful,â said Vamsi Bonthala, CEO and co-founder of Arbor Lodging Partners, a Chicago-based hotel investment and management firm with hotel investments in Indiana, Minnesota, Missouri and other markets. âWe are not out of the woods with the pandemic yet. “
The occupancy rate of hotels in the United States fell from 0.01% to 65.4% for the week of June 27 to July 3. Detroit, however, was one of only two markets to see a double-digit increase from 2019 numbers. Detroit saw an occupancy increase from 13.1% to 64.4%, while Phoenix occupied first place with an increase of 14% to 60.2%, according to research from STR, a division of CoStar.
Hotel occupancy rates, a key indicator in determining the health of the industry, increased significantly in 2021, in part due to accelerated vaccine distribution.
According to the LightBox report, hotel sales are expected to increase significantly in the second half of 2021, potentially reaching pre-pandemic levels in 2022 and 2023. The report says buyers will focus on hotels first. properties that may benefit from leisure travel, especially those within driving distance of large population pools.