2020 was a downright miserable year for hotels. During that time, hotels had their lowest occupancy rate on record -- 44%, compared to 66% in 2019.
Things do, however, have the potential to turn around in 2021. As coronavirus vaccines become more readily available to the public, we could see a boom in travel as people grow more comfortable with the idea of getting on a plane. That could lead to an uptick in hotel room bookings and revenue -- revenue so many hotels desperately need.
But this week, the Centers for Disease Control and Prevention (CDC) made an announcement that could constitute a major setback for hotels. And if it doesn't change its tune in the near term, hotels may end up with a more prolonged recovery than anticipated -- bad news for real estate investors.
The CDC still cautions against travel for the fully vaccinated
At this point, the bulk of the U.S. population has not been vaccinated against COVID-19. But with President Biden recently proclaiming that the U.S. will have a strong enough vaccine supply to inoculate all adults by the end of May, there's reason to be hopeful that we could turn a major corner on the pandemic in time for the summer travel rush.
Furthermore, many fully vaccinated Americans may be eager to get out and travel right now. But while the CDC does allow vaccinated adults some flexibility in what they can do, it specifically continues to caution against travel.
Of course, for some people, that message may have gotten buried amidst the knowledge that they can now, for the first time in roughly a year, hug their grandchildren without fear. But still, a lot of people are apt to take the CDC's advice as gospel, and if they heed the agency's warning to hold off on travel plans, it could constitute a major blow, not just to airlines, but hotels as well.
Now, some public health experts were quick to state that they felt the CDC is being overly cautious in its directive to avoid travel for the time being. Others, however, back that stance, citing the fact an uptick in travel could lead to a surge in COVID-19 cases at a time when much of the public still hasn't gotten a vaccine. While there's evidence that vaccinated people are less likely to experience severe COVID-19 symptoms, we still don't know to what extent those people are likely to transmit the virus to others if exposed -- hence the CDC's caution.
Will the CDC change its tune on travel once a larger percentage of Americans are vaccinated? There's a good chance it will. But the fact it's advising fully vaccinated adults to halt travel right now is apt to cause hotels even more pain. And if the CDC doesn't alter its stance on travel in time for the summer rush, it could really be enough to drive struggling hotels into the ground.
The Millionacres bottom line
Earlier this year, the American Hotel & Lodging Association said it expects hotel occupancy to average 52% in 2021. But if the CDC is slow to give the green light to travel, bookings could remain sluggish, thereby missing that mark. Throw in the fact that business travel isn't expected to return to pre-pandemic levels until 2023, and it's very clear that hotels need a lifeline. Unfortunately, it doesn't look like the CDC is about to give them one.