Holiday season

Holiday Season Performances Raise Hoteliers’ Expectations

Hoteliers and management companies received an unexpected giveaway in the past holiday season from US leisure travelers who booked more rooms at higher rates than this time of year before the pandemic.

“We love the leisure traveler these days because that’s what really drives them,” Mark Hemmer, president of Vancouver, Wash.-Based hotel management company Vesta Hospitality, said of the 17 his company’s hotels in 15 US states.

During the Christmas and New Year holidays, hotels in Vesta sold nearly twice as many rooms as the previous year at an average daily rate between 25 and 75% higher, he said.

Compared to pre-2019 pandemic performance, this was “a much more modest improvement,” Hemmer said, with company portfolio occupancy up 5-10 percentage points and ADR at a premium of 10 to 30%.

On average, U.S. Hotels Set Christmas Day Occupancy Record, according to data from STR, the hotel analysis company of CoStar.

“Hotels reported their highest Christmas occupancy since 2015 in 2021, but it was the day of the week – Saturday – that helped the historically low holidays claim that wreath,” the analyst said. STR principal Kelsey Fenerty, calling that “Saturdays are generally the busiest day of the week, and Christmas Day is generally one of the least crowded days of the year.

Rates are a different – and better – story for American hotels during the holidays, especially New Years, Fenerty said.

For New Years Eve and the week ending January 1, 2022, “ADR was the star of the show,” she said. US hotels reported highest weekly ADR on record [$157.91], an increase of 20.7% compared to the same week in 2019. “

Much of this rate increase can be attributed to renewed price strength for upscale hotels in resort destinations, she said.

“The upscale hotels, which struggled the most during the pandemic due to their reliance on group demand, stood out this week with an ADR of almost 25% from 2019 levels, which suggests that the charging power for transient demand is very strong, ”she said.

For hoteliers, success “always means comparing to what you thought would happen,” Hemmer said. “Let’s face it, during the whole COVID affair, going back the last two years, you didn’t know what to expect. You have to be light these days, knowing that you are not always in control. That said, we found the performance around the two vacations to be exceptional. ”

While there is still a lot of uncertainty surrounding the pandemic and the recovery of the hospitality industry, he said the strong holiday performance put the year ahead in a slightly brighter light.

“When we were preparing our 2022 budgets, from September to October, the big question was, ‘Will leisure travel continue at the same pace?'” He said. “We hedged our bets a bit. We thought demand would still be strong, but maybe the rate wouldn’t be as robust. We’re delighted with what we saw in December. That said, neither of us knows what’s going to happen. We are attentive, and our teams are attentive. If anything changes, we just try to put ourselves in a good position by hotel and by market to react.

Questions remaining for 2022 include how business and group travel will rebound from the pandemic.

Jason LaBarge, senior vice president of Birmingham, Ala.-Based hotel management company HP Hotels, said that while small groups – especially social, military, educational, religious and fraternal groups, also known as groups SMERF – Book at pre-pandemic levels, Business bookings are “likely still 15-20% below pre-pandemic levels” for his company’s portfolio of more than 40 hotels in 17 states.

“The markets that have been most affected are the urban markets. From a business perspective, it hasn’t rebounded as much as we would like. In the third and fourth quarter, some major special events, sporting events and small conferences started to return. “said LaBarge.

“It will continue to improve,” he said, adding that in markets such as Charlotte, North Carolina, the business travel segment is more regionally focused.

“Wells Fargo, in particular, is still expecting 50,000 travelers to the Charlotte market in 2022,” he added.

LaBarge attributed the success of his company’s hotels to the holidays – when occupancy rose to 86% from 2020 and up to 20% from 2019 and rates significantly exceeded both years previous ones – focusing on where the business came from. ”

“As the business of the companies fell, we turned to the construction companies and the social groups, and some of the sports groups that still travel,” he said.

To start 2021, the HP Hotels portfolio was performing around 40% to 50% below pre-pandemic levels, he said.

“Throughout the year the gap narrowed, and in Q3 and early Q4 we were 15% behind [2019]“Said LaBarge.“ We expected to end the year there. To see these two vacations really exceed those expectations was fantastic. It was not expected, but I am also not too surprised, given the demand and discussions with colleagues, friends and family in different markets. ”

Hemmer said business travel has “rebounded a bit” in some of the markets where his company has hotels, but “for the most part, the business traveler just isn’t here to like.”

“It’s just nowhere near the levels we need it to be, or close to 2019,” he said. “We have a few group hotels, and it’s been really hit or miss. We were ready to bounce back in Q4 [of 2021], glad to have business on the books, but then we had a COVID resurgence again and started lining up cancellations and postponements. We can book it all day, that doesn’t mean it will show up. It’s a little exasperating and forces us to change direction. If you’ve booked the group, you better keep booking others as well, because you can’t trust them. ”

The company tries to discourage groups from canceling, but with the schedule filling up for 2022, the flexibility to reschedule this year is running out.

“What we want them to do is just postpone it and reschedule it,” he said.

Fortunately, group bookings for 2022 dates are plentiful, Hemmer said.

“At our largest group convention hotel there are a few gaps in the schedule, but we’re 90% full for the year,” he said. “We’re not going to take anything new, but as we try to reschedule we’ve been very successful in moving to the dates that are still available to us. The groups have been very flexible and have worked well with us. But it’s going to be. more difficult in the future because we just don’t have options. ”

LaBarge said HP’s hotels have also been successful in rescheduling groups that have called for cancellations over concerns over increasing COVID-19 cases.

“At the beginning of January, several small social groups canceled due to the COVID variant, but honestly, as many as we have canceled, we have also booked replacements; and the groups did not cancel long term. We moved most in the following months – February and March, ”he said.

“The way the fourth quarter went is very encouraging,” he added. “We expect growth to continue, demand to increase, and build on the momentum we had in 2021.”

HP previously predicted performance in 2022 to be down 10% from 2019. Now LaBarge has said he expects second-quarter performance to be less than 5% of prior figures. pandemic, “and by the third quarter they will return to the level of 2019 was.”

Cory Chambers, Atlanta, Ga. Senior vice president, Hospitality Ventures Management Group, said by email that the company’s portfolio of more than 50 hotels also “exceeded forecasts and budgeted expectations overall. “during the holidays, run by hotels in hot regions. meteorological destinations and some urban markets, while those in suburban and tertiary markets lagged expectations.

“Income growth was balanced between occupancy and ADR, which was a positive trend as occupancy lagged before and after the holidays,” he said.

Despite the strong holiday performance, Chambers said the company expects the first quarter recovery “to slow down a bit due to group demand trends and mild transients due to the current state of the market. pandemic “. He added that HVMG announced group cancellations in the first quarter after this segment started showing strong signs of recovery.

Jennifer Driscoll, vice president of revenue management at McNeill Hotel Company, based in Germantown, Tennessee, which has 27 hotels in its portfolio in the United States, said via email that the company is forecasting a stronger holiday season and “began planning for additional demand immediately after Labor Day.”

“Looking at 2019 and 2020, not only did we beat those years of occupation for Christmas, but we also beat it considerably in ADR. For the McNeill portfolio, our occupancy rate increased by 24% compared to 2019, and our ADR was up almost 20%. For New Years Eve, when our occupancy rate was relatively stable compared to last year, we significantly increased ADR in 2019 and 2020. Switching to two public holidays on weekends also helped to overall performance, “she said.

She added that the company continues to be optimistic about the performance of 2022 and is closely monitoring segment and market trends, in particular “demand from individual business travelers, small meetings… and leisure”.

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