The Next Normal is Coming

normal

Hospitality expert predicts uneven, but inevitable recovery

Jan Freitag

We will be traveling and meeting again. That’s the uber message from Jan Freitag, senior vice president at STR, which collects market data on the hotel industry. “It’s going to be painful tomorrow, but then things will get to the ‘next normal,’” Freitag predicts.

Think Zoom meetings might become the permanent replacement for F2F? “After 9/11, a lot of people said no one would fly again,” he says. “There’s a high likelihood that we will meet in large groups again.”

Location Specific Reality

“If you have a beach or a mountain, you’re doing all right now,” he says. “Idaho and Montana have done really well this summer, and so has Florida and Colorado—because there is the perception they offer wide-open distances.”

It’s the downtown urban centers that are hurting most. “There’s no group demand,” Freitag says. “It’s economy over full-service hotels, drive-to over fly-to, rural over urban. Upper-upscale hotels are registering only 30 percent occupancy. Extended-stay properties are seeing occupancy in the 70 percent range.”

Freitag says he’s been impressed with the proactive way hotel companies have created new market niches. “Like making the pitch that people work from a hotel room down the road. That was never on anybody’s plan before,” he says.

An Upward Trend

Over the past three months, STR’s hotel data “has gotten consecutively better,” Freitag says. “April was the worst ever recorded. July was down only 53 percent, and August was 42 percent down, year over year.” He thinks this trend will continue.

At the same time, he’s seeing a decline in new hotel rooms being built, and expects that trend to extend, as well.

The resumption of business travel, including for meetings, will likely be segmented. He predicts, “If you’re a small company, it’s more likely. But if you’re the CEO of Microsoft, you’re also the chief risk officer”—and therefore it’s less likely.

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