As the travel industry continues to navigate the COVID-19 pandemic, fears surrounding the new omicron variant have yet to worry airlines and cruise operators as much as previous spikes have. While those industries are not forecast to return to pre-pandemic operations until late 2022, the hotel industry has quietly staged an impressive comeback this year. Demand for domestic hotels has thus far been undeterred by the recent surge in COVID cases, and prices remain strong heading into the new year.
Hotels around the country are nearing or have already surpassed pre pandemic occupancy, which has helped major hotel operators regain their 2019 valuations. Hotels could be set outperform in 2022 as air travel slowly but surely recovers, which will subsequently boost demand for hotels further.
Related ETF & Stocks: AdvisorShares Hotel ETF (BEDZ), Marriott International, Inc. (MAR), Hilton Worldwide Holdings Inc. (HLT), Wyndham Hotels & Resorts, Inc. (WH)
Hotels Recovery on Faster Pace Than Travel Counterparts
After an impressive Thanksgiving holiday for the aviation industry, in which some airports experienced their busiest days since the onset of the pandemic, Christmas travel was well below 2019 levels, per CNN. However, airlines still expect the fallout from the new omicron variant to be a speedbump in the road to recovery next year.
Similarly, MRP has recently highlighted the cruise industry’s path toward profitability in 2022, which may be slightly delayed due virus uncertainties. Reuters reports that long-term demand for cruising and strong bookings late next year indicate that the omicron threat could fade soon.
Hotels, meanwhile, have been much less affected by virus spikes, quietly returning to pre-pandemic valuations. Skift reports that hotel occupancy rates were 20% higher during the Thanksgiving week and only 8% lower over the Christmas holiday week when compared to 2019 rates.
According to CoStar, leisure demand has been driving the hotel recovery in 2021, with weekend demand already returning to 2019 levels. The hotel recovery in the US has been much stronger than in other parts of world as their have been less restrictions and lockdowns thus far.
Further, CoStar reports that travelers are booking longer hotel stays, averaging 1.7 nights per stay, up from 1.2 nights per stay. That has helped boost revenues for some of the major limited-service and select-service hotels, which are now trading above 2019 valuations.
Not only has demand been resilient, but hotel pricing has also remained elevated throughout the year. Hotel prices…
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