Hotels See Leisure Travel Return, But It's Still Going To Be A Tough Year

Leisure travelers are slowly returning to the hotel market even though the lodging industry as a whole faces ongoing financial strain from the coronavirus pandemic and a longer road to full recovery, industry experts say.

Hotel activity has definitely improved from April and May to June, Omni Hotels & Resorts President Peter Strebel said while speaking Wednesday at Bisnow’s “Owning and Operating Hotels Post Pandemic” webinar. 

“From a company perspective, in the month of May, we ran about 20% occupancy in the hotels that were opened,” Strebel said. “At the time, all of the Omni hotels were closed, expect for seven locations, leaving only 15% of the Omni hotel chain open during the pandemic.”

Strebel said Omni, like many hotel chains, is still fighting to keep its head above water, but there are notable signs of improvement, like the return of the leisure traveler this past month. 

“We are seeing occupancy grow week-over-week,” Strebel said. “In our resort portfolio in regional destinations like Austin, Texas; San Antonio; the Omni Grove Park Inn in Asheville, North Carolina; the Amelia Islands [Florida]; and Hilton Head [South Carolina], those resorts are really doing well on weekends. We are actually almost to full capacity on weekends.”

Unfortunately, those activity levels die off midweek since a dramatic reduction in business and convention travel remains a barrier to normal hotel activity levels. 

While CBRE Director of Hotels Consulting Jeff Binford agrees it will take some time to get convention and business travelers back to hotels, he is more optimistic about the leisure segment. 

“We all have cabin fever and we have got to go out,” Binford said. “The beaches opened up first, and as soon as they did, those hotels were hitting 100% occupancy consistently in all of those beach towns.”

Both Strebel and Binford say it will take until the fall of 2020 — or maybe even longer — for the hotel business to return to normal activity levels. 

While Binford has seen projects in the hotel development pipeline fall off the vine since the coronavirus outbreak, those that were already progressing prior to the shutdown now have the chance to stand out in the hotel space when they are finished with construction. 

“When you open two years from now, most of this will be gone,” Binford said. “The existing inventory will be a little more tired, and most of the existing inventory owners will not have the ability to maintain the properties the way they would like, and so when you open you will be the newest, shiniest penny in the market.”

Even though there has been much talk about hotels implementing high-tech tools and technologies, 5G Studio Collaborative principal architect and partner Yen Ong said clients looking for hotel design work are not necessarily paying for top tech tools like touchless elevators right now. 

“What we are seeing from clients is I think people are still approaching the pandemic with a mixed optimism,” Ong said. “They hope it will somehow be overcome and it will go back to normal.”

Ong sees a focus on practical hotel designs going forward. 

“For most of our clients, their first instinct is to have us think through design features that will be adaptable, not necessarily things that will be permanent fixtures in the building.”