The coronavirus pandemic has changed the way people live, work, and travel -- and it's the latter point that's hammered hotels. Last year, hotel occupancy rates hit their lowest level on record -- 44%, compared to 66% in 2019. And this year, the American Hotel & Lodging Association expects hotel occupancy levels to average just 52%.
A big reason for this boils down to a glaring lack of business travel. Employers have mostly halted work-related trips to avoid the potential liability they could produce. After all, if it's not safe enough for workers to gather in office buildings, it stands to reason employers wouldn't want to put employees on a plane.
A lack of business conferences is also hurting hotels. Normally, these events can help rooms sell out during off-peak periods, and revenue is generated from meeting rooms alone.
Unfortunately, business travel is not expected to return to pre-pandemic levels until 2023. And while the rollout of coronavirus vaccines could lead to a surge in leisure travel this year, many Americans are still grappling with financial uncertainty related to the greater economic crisis. As such, hotels may be in for another rocky year.
But one coronavirus-related trend could actually help compensate for a lack of business travel this year -- remote work.
Will hotels see an influx of restless employees?
Remote work has been a mixed bag for a lot of people. While some employees are enjoying perks like not having to commute and getting to sleep in, others are less than thrilled with the arrangement. For some, it's a matter of communication issues and productivity declines. For others, however, it's a matter of restlessness.
For those not used to working from home, staring at the same walls day in, day out, can be a challenge. Throw in the fact that many Americans are getting cabin fever after a year of pandemic-related restrictions, and remote workers may be eager to pick up and travel once they're able to get a vaccine. If that happens, hotels could see a surge in revenue as remote employees take advantage of their newfound flexibility by doing their jobs from different corners of the country.
Incidentally, it's not just hotels that could benefit from remote work travel. Short-term rentals could also see a boom in bookings as workers set up shop in different cities for weeks at a time. Similarly, extended-stay hotels may enjoy an uptick in interest as remote workers try out new parts of the country.
Now this isn't to say that remote workers will completely compensate for a lack of business trips. Let's remember that large corporations have lots of money to throw at business travel, whereas the average person who works from home is likely to be on more of a budget. But still, at this stage of the game, hotels will take all the bookings they can get, and if they wind up selling extra rooms to workers looking to escape the confines of their usual home offices, that won't be a bad thing at all -- especially for real estate investors invested in hotels.