The Recovery of the Hotel Industry

by August 20, 2021
Photo by Kevinjonah Paguio

Since March 2020, the hotel industry has suffered immensely due to the COVID-19 pandemic. Hundreds of thousands of hotel employees were let go or furloughed. Millions of dollars were lost. With the introduction of effective vaccines and health guidelines, the hotel industry is hoping for a recovery, albeit a slow one.

Pre-pandemic, the hotel industry, as a whole, contributed $660 billion to the U.S. GDP, according to the American Hotel and Lodging Association (AHLA). AHLA also reported that the industry supported 1 out of 25 Americans, four percent, with jobs. The national average salary of a hotel worker, according to ZipRecruiter, was $40,153 per year (around $19.30/hour). However, it varies, from the estimated lowest yearly salary of $16,500 to the highest salary of $93,500. Nevertheless, everything changed when COVID-19 made itself known.

The hotel industry was one of the first industries affected by COVID-19. With the virus spreading and infecting millions of people, a majority of the populace were hesitant to travel and book hotel rooms. In 2018 and 2019, hotel occupancy was 66% (around 1.3 billion rooms). In 2020, that number fell to 44%. In April of that year, hotel occupancy dropped even lower to 24.5%.

As a result of fewer rooms being occupied and fewer paying guests, the industry saw a steep decline in every sector. According to the AHLA, more than 670,000 direct hotel industry operations jobs and nearly 4 million jobs in the broader hospitality industry were lost due to the pandemic.

As for revenue, it was also a bleak situation. In 2019, hotel revenue was $167 billion. In 2020, the revenue dropped to $85 billion, more than half from the year before. To add on, Hospitality Net reports that the industry reported a decline of 84.6% in U.S. hotels’ gross operating profit per available room.

Nevertheless, the industry is seeing signs of recovery. Slowly, hotels are rebounding.

Hotel room occupancy has grown since 2020. Hotels experienced a 52% occupancy rate in 2021, up from 44% in 2020. Also, revenue is slowly recovering. The AHLA estimates that the industry’s revenue will be $110 billion, up from 2020’s revenue of $85 billion. Workers are also coming back. AHLA has predicted that 200,000 jobs will be taken up. It’s still a net loss of 478,245 hotel employees from pre-pandemic levels, but a recovery nonetheless.

According to Hospitality Net, there is a three-step process for recovery. It predicts that domestic leisure travel will rebound first. With vaccinations available and people desiring to travel at least domestically, hotels will see an uptick in domestic guests. Then, the second phase will entail small and medium events (i.e., intimate gatherings such as weddings). Lastly, business conferences and events will be the final step to the plan.

There are also changes in how hotels will operate. Forbes predicts that people will plan on having longer hotel stays. It surveyed industry professionals and 83.2% say that travelers are more inclined to stay at short-term rentals rather than a conventional hotel. They go even further to say that traditional hotels will remain less popular.

As a result, 60.4% believe that hotels’ business strategies will change, incorporating alternative accommodations into their plans. Marriott International is already doing this with its “Homes & Villas by Marriott International,” a home rental initiative. This is a model that is similar to Airbnb, where 2,000 premium or and luxury homes will be rented to guests. Obviously, this is for the more well-off, but Mariott could expand this experiment to cover middle class families, putting pressure on short-term rental businesses like Airbnb and Vrbo.

As you can see, there is hope for the hotel industry. There are also constantly changing plans occurring within the sector.

It is important to determine what hotel chains are planning. The biggest hotel chains—Marriott International, Inc.; Hilton Worldwide Holdings; Accor; Wyndham Worldwide Corporation; Hyatt Hotel Corporation—are preparing for a rebound. This means changing business strategies. As a reporter, you need to be up to date on these chains’ plans for bouncing back. These companies have news sections on their websites, so utilize them. Below are the news sections of these hotel chains:

After perusing the news sections, see if they answered your questions. Are they doing something like Marriott where they are investing in short-term rentals? Is the company downsizing? Is it employing tactics similar to that during the 2008 recession? These are the questions that need a thorough answer.

Also, interview hotel staff. First and foremost, let them decide. If they are uncomfortable with doing an interview, move on to the next potential group. When you do reach that group, interview the hotel manager first to see the overall picture. Then, interview the base hotel employees to get a glimpse of their experience within the industry. You can then compare the two accounts and see if they match up; it’s always important to discern if a group is on the same page or if there is a discrepancy.

Finally, research basic data. How many hotels have closed? What was the total revenue of hotel chains in this year compared to last year? Are employers accepting financial aid from the local and federal government? If yes, how much? Did they spend the aid responsibly? Was there a decrease in the number of guests and employees? Always start off with a basic foundation. After gaining that, you can dive into the details which are as important as the overall story.



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