Market Insights | US Hotel 2Q 2020

What's Happening Next in Hospitality? Explore news, trends & sound bites from the leading US Hotel REITs.

Fred Krom
November 18, 2020

Host Hotels & Resorts (HST) – 7/31/2020

“Across the top 70 markets, new room construction fell by 75%+ from peak to trough in 2008-2011. We expect supply to bottom at even lower levels vs. 2008-2011 given the significantly greater degree of distress.”

“We prefer to remain operational vs suspended as we can capture spontaneous short term demand and better positioned to attract future demand when the market begins to recover.”

“Assuming performance remains at 2Q levels, we expect about $100 to $110 million of monthly cash outflows, reflecting an average hotel level loss of $50 million/month.”

“Revenue pace is down 81% in 3Q and 49% in 4Q and we expect group cancellations in 2H20.”

“In 2Q, direct sales through Marriott.com increased 400 bps YOY, compared sales through the OTAs up by only 200 bps.”

“Our analysis indicates that nearly 30% of upper tier hotels in our top 20 markets are temporarily closed.  Seven hotels in our top 20 markets are reported to have permanently closed already and we expect more of the temp closures to become permanent.”

“Florida hotels delivered remarkable ADR growth of approximately 12% YOY with ADR for the month of June, approximately $97 higher.”

“Hotels in our drive-to leisure markets, which include Phoenix, San Antonio, San Diego, Florida Gulf, Miami and Jacksonville were running a 1.8% occupancy at the beginning of 2Q and had progressed to 17.4% by the last week of June.”

Hyatt Hotels (H) – 8/4/2020

"Occupancy for open full-service and select service hotels in the Americas range from a low of 6% and 15%, respectively in April to about 21% and 43% in July, based on preliminary estimates.”

“We've reopened many hotels over the past few months with 80% of our hotels open at the end of June and approximately 87% at the end of July.”

“In the US, 65%+ of our full-service and 75%+ of our select service bookings are being made only four days ahead of the stay. This is the shortest transient booking window we’ve seen.”

“We continue to experience near-term group business cancellations in North America and expect this to continue over the remainder of this year.”

“We have effectively reduced the breakeven occupancy level of our full-service hotels by at least 5 percentage points around the world and in some cases more.”

“On select service development, the banks are waiting for better visibility on the profile of the recovery before making commitments to new construction.”

Choice Hotels International (CHH) – 8/6/2020

“Between the start of COVID in mid-March through 2Q, our portfolio of 414 extended-stay hotels grew 8% YOY. Average occupancy rates of 66% nearly double the industry average.”

“US daily occupancy levels surpassed 60% in early August. Over 50% of US hotels experienced occupancy levels north of 50% during the last week.”

“In recent months, leisure travel has climbed to represent 80%+ of consumed room nights system-wide.”

“In June, 25% of our revenue came from customers, who traveled less than 25 miles to a hotel, a sign that more guests want to get out of the house while staying closer to home.”

“In April during peak COVID cases we had 90%+ of our US hotels open, which demonstrated the tenacity and resilience of our ownership base. Today, we're nearly 100% open.”

“US occupancy troughed at 28% in early April, compared to the overall industry of 21%.”

Hilton Worldwide Holdings (HLT) – 8/6/2020

“It will be 2-3 years to get back to the demand levels experienced in 2018-2019. We will be in the 45%-50% range this fall and then moving our way slow and steady up from there.”

"During the 4th of July weekend, nearly 800 hotels in the US ran 80%+ occupancy."

“As we look to the fall, we hope to see a continuation of the modest pickup in business transient demand, which would offset slower leisure demand post summer”.

“On development, activity was disrupted given macro challenges yet, we still added 7,000 rooms to the system and achieved 4.8% YOY net unit growth.”

“Everybody expects a bargain in this environment, so yes, there's rate pressure broadly. But if you look at the data, if you look at the math, the bulk of it is just mix.”

“The OTA business from a distribution point of view has held relatively constant.  Our direct channels are growing at a faster pace.”

RLJ Lodging Trust (RLJ) – 8/7/2020

"The booking windows right now are extremely short at 0-3 days. 50% of our contribution has come from that 0-3 day window. So, we don't have the ability to look forward."

“Our urban hotels were particularly impacted by the lack of demand which limited our 2Q total portfolio occupancy to 11.7%.”

“Our portfolio of select service and compact full service hotels, which have a smaller footprint and lower operational complexity, allow our hotels to breakeven at low occupancy levels.”

“RevPAR contracted substantially throughout 2Q declining by 95.1%, 92.3% and 86.6% in April, May and June, respectively.”

“Airbnb is doing well but the importance of flexibility (e.g., cancellation policy) the past 2-3 months has spurred demand for our brands vs. AirBnB (host responsible for cancellation).”

“We see the need for contract labor in Boston, Atlanta, Orlando. Bringing back staff has been a challenge given unemployment benefits, childcare, or safety risk.”

“Currently, we're running at 20-25% of normal labor levels at full and limited service hotels.”

Marriott International (MAR) – 8/10/2020

“Today, 9% of our global properties remain closed vs. 25%+ in April. There is still no visibility into when RevPAR could return to 2019 levels.”

“Every segment has gotten better every month, albeit with leisure and drive-to being the strongest. We see government and corporate business up modestly.”

“When you think about the depth of the recession, to only have a few hotels foreclosures demonstrates everyone’s desire to see the way through.”

“There are hotels in NYC that were not making pre COVID. Some have closed and some may not reopen given labor cost or property tax burdens.”

“Blending of leisure and business could actually be a need as much as a threat to travel. We will get back to the levels of travel demand of the recent past.”

“Group business on the books for 2021 vs. the same time last year is down about 10%.”

Extended Stay America (STAY) – 8/11/2020

“100% of our guest rooms have full kitchen providing unprecedented level of control over their travel experience, a critical customer preference and be even more appreciated than before.”

“During 2Q, our comp system-wide RevPAR declined by 28.7% vs. industry declines of 70% and declines of roughly 50% for other mid-priced extended stay hotel rooms.”

“From a low point in the high 50s range in April, we are now operating at 81% occupancy in August. This is above our 2019 full year average and consistent with pre COVID levels.”

“In August, with 17 of our top 50 markets currently showing either positive RevPAR comparisons or down just 5% or less.”

“Average daily rate has improved as well from $33 ADR in late April to $59 last week. We now have more hotels operating above 90% occupancy than below 70%.”

“Extended stay guest revenue increased to 72% vs. 61% in 2Q19, nearly achieving our long-term goal of 75% to 80% of our revenue.”

Market Insights | US Hotel 2Q 2020

What's Happening Next in Hospitality? Explore news, trends & sound bites from the leading US Hotel REITs.

Fred Krom
November 18, 2020
|
Hotel

Host Hotels & Resorts (HST) – 7/31/2020

“Across the top 70 markets, new room construction fell by 75%+ from peak to trough in 2008-2011. We expect supply to bottom at even lower levels vs. 2008-2011 given the significantly greater degree of distress.”

“We prefer to remain operational vs suspended as we can capture spontaneous short term demand and better positioned to attract future demand when the market begins to recover.”

“Assuming performance remains at 2Q levels, we expect about $100 to $110 million of monthly cash outflows, reflecting an average hotel level loss of $50 million/month.”

“Revenue pace is down 81% in 3Q and 49% in 4Q and we expect group cancellations in 2H20.”

“In 2Q, direct sales through Marriott.com increased 400 bps YOY, compared sales through the OTAs up by only 200 bps.”

“Our analysis indicates that nearly 30% of upper tier hotels in our top 20 markets are temporarily closed.  Seven hotels in our top 20 markets are reported to have permanently closed already and we expect more of the temp closures to become permanent.”

“Florida hotels delivered remarkable ADR growth of approximately 12% YOY with ADR for the month of June, approximately $97 higher.”

“Hotels in our drive-to leisure markets, which include Phoenix, San Antonio, San Diego, Florida Gulf, Miami and Jacksonville were running a 1.8% occupancy at the beginning of 2Q and had progressed to 17.4% by the last week of June.”

Hyatt Hotels (H) – 8/4/2020

"Occupancy for open full-service and select service hotels in the Americas range from a low of 6% and 15%, respectively in April to about 21% and 43% in July, based on preliminary estimates.”

“We've reopened many hotels over the past few months with 80% of our hotels open at the end of June and approximately 87% at the end of July.”

“In the US, 65%+ of our full-service and 75%+ of our select service bookings are being made only four days ahead of the stay. This is the shortest transient booking window we’ve seen.”

“We continue to experience near-term group business cancellations in North America and expect this to continue over the remainder of this year.”

“We have effectively reduced the breakeven occupancy level of our full-service hotels by at least 5 percentage points around the world and in some cases more.”

“On select service development, the banks are waiting for better visibility on the profile of the recovery before making commitments to new construction.”

Choice Hotels International (CHH) – 8/6/2020

“Between the start of COVID in mid-March through 2Q, our portfolio of 414 extended-stay hotels grew 8% YOY. Average occupancy rates of 66% nearly double the industry average.”

“US daily occupancy levels surpassed 60% in early August. Over 50% of US hotels experienced occupancy levels north of 50% during the last week.”

“In recent months, leisure travel has climbed to represent 80%+ of consumed room nights system-wide.”

“In June, 25% of our revenue came from customers, who traveled less than 25 miles to a hotel, a sign that more guests want to get out of the house while staying closer to home.”

“In April during peak COVID cases we had 90%+ of our US hotels open, which demonstrated the tenacity and resilience of our ownership base. Today, we're nearly 100% open.”

“US occupancy troughed at 28% in early April, compared to the overall industry of 21%.”

Hilton Worldwide Holdings (HLT) – 8/6/2020

“It will be 2-3 years to get back to the demand levels experienced in 2018-2019. We will be in the 45%-50% range this fall and then moving our way slow and steady up from there.”

"During the 4th of July weekend, nearly 800 hotels in the US ran 80%+ occupancy."

“As we look to the fall, we hope to see a continuation of the modest pickup in business transient demand, which would offset slower leisure demand post summer”.

“On development, activity was disrupted given macro challenges yet, we still added 7,000 rooms to the system and achieved 4.8% YOY net unit growth.”

“Everybody expects a bargain in this environment, so yes, there's rate pressure broadly. But if you look at the data, if you look at the math, the bulk of it is just mix.”

“The OTA business from a distribution point of view has held relatively constant.  Our direct channels are growing at a faster pace.”

RLJ Lodging Trust (RLJ) – 8/7/2020

"The booking windows right now are extremely short at 0-3 days. 50% of our contribution has come from that 0-3 day window. So, we don't have the ability to look forward."

“Our urban hotels were particularly impacted by the lack of demand which limited our 2Q total portfolio occupancy to 11.7%.”

“Our portfolio of select service and compact full service hotels, which have a smaller footprint and lower operational complexity, allow our hotels to breakeven at low occupancy levels.”

“RevPAR contracted substantially throughout 2Q declining by 95.1%, 92.3% and 86.6% in April, May and June, respectively.”

“Airbnb is doing well but the importance of flexibility (e.g., cancellation policy) the past 2-3 months has spurred demand for our brands vs. AirBnB (host responsible for cancellation).”

“We see the need for contract labor in Boston, Atlanta, Orlando. Bringing back staff has been a challenge given unemployment benefits, childcare, or safety risk.”

“Currently, we're running at 20-25% of normal labor levels at full and limited service hotels.”

Marriott International (MAR) – 8/10/2020

“Today, 9% of our global properties remain closed vs. 25%+ in April. There is still no visibility into when RevPAR could return to 2019 levels.”

“Every segment has gotten better every month, albeit with leisure and drive-to being the strongest. We see government and corporate business up modestly.”

“When you think about the depth of the recession, to only have a few hotels foreclosures demonstrates everyone’s desire to see the way through.”

“There are hotels in NYC that were not making pre COVID. Some have closed and some may not reopen given labor cost or property tax burdens.”

“Blending of leisure and business could actually be a need as much as a threat to travel. We will get back to the levels of travel demand of the recent past.”

“Group business on the books for 2021 vs. the same time last year is down about 10%.”

Extended Stay America (STAY) – 8/11/2020

“100% of our guest rooms have full kitchen providing unprecedented level of control over their travel experience, a critical customer preference and be even more appreciated than before.”

“During 2Q, our comp system-wide RevPAR declined by 28.7% vs. industry declines of 70% and declines of roughly 50% for other mid-priced extended stay hotel rooms.”

“From a low point in the high 50s range in April, we are now operating at 81% occupancy in August. This is above our 2019 full year average and consistent with pre COVID levels.”

“In August, with 17 of our top 50 markets currently showing either positive RevPAR comparisons or down just 5% or less.”

“Average daily rate has improved as well from $33 ADR in late April to $59 last week. We now have more hotels operating above 90% occupancy than below 70%.”

“Extended stay guest revenue increased to 72% vs. 61% in 2Q19, nearly achieving our long-term goal of 75% to 80% of our revenue.”

Market Insights | US Hotel 2Q 2020

What's Happening Next in Hospitality? Explore news, trends & sound bites from the leading US Hotel REITs.

Fred Krom
November 18, 2020
|
Hotel

Host Hotels & Resorts (HST) – 7/31/2020

“Across the top 70 markets, new room construction fell by 75%+ from peak to trough in 2008-2011. We expect supply to bottom at even lower levels vs. 2008-2011 given the significantly greater degree of distress.”

“We prefer to remain operational vs suspended as we can capture spontaneous short term demand and better positioned to attract future demand when the market begins to recover.”

“Assuming performance remains at 2Q levels, we expect about $100 to $110 million of monthly cash outflows, reflecting an average hotel level loss of $50 million/month.”

“Revenue pace is down 81% in 3Q and 49% in 4Q and we expect group cancellations in 2H20.”

“In 2Q, direct sales through Marriott.com increased 400 bps YOY, compared sales through the OTAs up by only 200 bps.”

“Our analysis indicates that nearly 30% of upper tier hotels in our top 20 markets are temporarily closed.  Seven hotels in our top 20 markets are reported to have permanently closed already and we expect more of the temp closures to become permanent.”

“Florida hotels delivered remarkable ADR growth of approximately 12% YOY with ADR for the month of June, approximately $97 higher.”

“Hotels in our drive-to leisure markets, which include Phoenix, San Antonio, San Diego, Florida Gulf, Miami and Jacksonville were running a 1.8% occupancy at the beginning of 2Q and had progressed to 17.4% by the last week of June.”

Hyatt Hotels (H) – 8/4/2020

"Occupancy for open full-service and select service hotels in the Americas range from a low of 6% and 15%, respectively in April to about 21% and 43% in July, based on preliminary estimates.”

“We've reopened many hotels over the past few months with 80% of our hotels open at the end of June and approximately 87% at the end of July.”

“In the US, 65%+ of our full-service and 75%+ of our select service bookings are being made only four days ahead of the stay. This is the shortest transient booking window we’ve seen.”

“We continue to experience near-term group business cancellations in North America and expect this to continue over the remainder of this year.”

“We have effectively reduced the breakeven occupancy level of our full-service hotels by at least 5 percentage points around the world and in some cases more.”

“On select service development, the banks are waiting for better visibility on the profile of the recovery before making commitments to new construction.”

Choice Hotels International (CHH) – 8/6/2020

“Between the start of COVID in mid-March through 2Q, our portfolio of 414 extended-stay hotels grew 8% YOY. Average occupancy rates of 66% nearly double the industry average.”

“US daily occupancy levels surpassed 60% in early August. Over 50% of US hotels experienced occupancy levels north of 50% during the last week.”

“In recent months, leisure travel has climbed to represent 80%+ of consumed room nights system-wide.”

“In June, 25% of our revenue came from customers, who traveled less than 25 miles to a hotel, a sign that more guests want to get out of the house while staying closer to home.”

“In April during peak COVID cases we had 90%+ of our US hotels open, which demonstrated the tenacity and resilience of our ownership base. Today, we're nearly 100% open.”

“US occupancy troughed at 28% in early April, compared to the overall industry of 21%.”

Hilton Worldwide Holdings (HLT) – 8/6/2020

“It will be 2-3 years to get back to the demand levels experienced in 2018-2019. We will be in the 45%-50% range this fall and then moving our way slow and steady up from there.”

"During the 4th of July weekend, nearly 800 hotels in the US ran 80%+ occupancy."

“As we look to the fall, we hope to see a continuation of the modest pickup in business transient demand, which would offset slower leisure demand post summer”.

“On development, activity was disrupted given macro challenges yet, we still added 7,000 rooms to the system and achieved 4.8% YOY net unit growth.”

“Everybody expects a bargain in this environment, so yes, there's rate pressure broadly. But if you look at the data, if you look at the math, the bulk of it is just mix.”

“The OTA business from a distribution point of view has held relatively constant.  Our direct channels are growing at a faster pace.”

RLJ Lodging Trust (RLJ) – 8/7/2020

"The booking windows right now are extremely short at 0-3 days. 50% of our contribution has come from that 0-3 day window. So, we don't have the ability to look forward."

“Our urban hotels were particularly impacted by the lack of demand which limited our 2Q total portfolio occupancy to 11.7%.”

“Our portfolio of select service and compact full service hotels, which have a smaller footprint and lower operational complexity, allow our hotels to breakeven at low occupancy levels.”

“RevPAR contracted substantially throughout 2Q declining by 95.1%, 92.3% and 86.6% in April, May and June, respectively.”

“Airbnb is doing well but the importance of flexibility (e.g., cancellation policy) the past 2-3 months has spurred demand for our brands vs. AirBnB (host responsible for cancellation).”

“We see the need for contract labor in Boston, Atlanta, Orlando. Bringing back staff has been a challenge given unemployment benefits, childcare, or safety risk.”

“Currently, we're running at 20-25% of normal labor levels at full and limited service hotels.”

Marriott International (MAR) – 8/10/2020

“Today, 9% of our global properties remain closed vs. 25%+ in April. There is still no visibility into when RevPAR could return to 2019 levels.”

“Every segment has gotten better every month, albeit with leisure and drive-to being the strongest. We see government and corporate business up modestly.”

“When you think about the depth of the recession, to only have a few hotels foreclosures demonstrates everyone’s desire to see the way through.”

“There are hotels in NYC that were not making pre COVID. Some have closed and some may not reopen given labor cost or property tax burdens.”

“Blending of leisure and business could actually be a need as much as a threat to travel. We will get back to the levels of travel demand of the recent past.”

“Group business on the books for 2021 vs. the same time last year is down about 10%.”

Extended Stay America (STAY) – 8/11/2020

“100% of our guest rooms have full kitchen providing unprecedented level of control over their travel experience, a critical customer preference and be even more appreciated than before.”

“During 2Q, our comp system-wide RevPAR declined by 28.7% vs. industry declines of 70% and declines of roughly 50% for other mid-priced extended stay hotel rooms.”

“From a low point in the high 50s range in April, we are now operating at 81% occupancy in August. This is above our 2019 full year average and consistent with pre COVID levels.”

“In August, with 17 of our top 50 markets currently showing either positive RevPAR comparisons or down just 5% or less.”

“Average daily rate has improved as well from $33 ADR in late April to $59 last week. We now have more hotels operating above 90% occupancy than below 70%.”

“Extended stay guest revenue increased to 72% vs. 61% in 2Q19, nearly achieving our long-term goal of 75% to 80% of our revenue.”

Insights