The coronavirus pandemic hammered hotels, so much so that 2020 was officially their worst year on record. Things improved during the 2021 summer travel surge, which kicked off at a time when COVID-19 case rates declined on a national level. But then the delta variant took hold, and it caused a shift in consumers' plans.
In August 2021, hotel room occupancy levels sat at 63.2%, according to STR. That represents an 11.3% decline from August 2019. And now that the summer travel boom is over, hotels could be looking at shrinking revenue for the remainder of the year, especially as the delta variant continues to fuel COVID-19 outbreaks across the country.
At this point, real estate investors with money in physical hotels or hospitality REITs (real estate investment trusts) may be worried that they're in for several more painful quarters before hotels stage a more robust recovery. But a recent policy change could change hotels' outlook for the better.
Easing up on vaccinated travelers from abroad
Though many countries have opened their doors to fully vaccinated U.S. travelers in the course of 2021, the U.S. wasn't so quick to reciprocate. But now, the Biden administration has announced plans to ease travel restrictions on tourists from overseas who can provide proof of vaccination.
The new set of rules will take effect in early November, and they will allow fully vaccinated visitors from overseas to enter the U.S., provided they take a COVID-19 test within three days of their flights and can show proof of a negative test prior to boarding. Furthermore, fully vaccinated travelers will not be subject to quarantine requirements once they reach the U.S., provided they're able to provide proof of a negative COVID-19 test.
For many months, the travel industry has been lobbying the federal government to lift some of the rules that have prevented international tourists from entering the U.S. Not only have hotels taken a hit during the pandemic, but airlines, too, are hoping to recover from a miserable 2020.
Thankfully, these changes are set to take place right in time for the holidays, which could benefit U.S. hotels tremendously. Last year, many hotels didn't manage to capitalize on the holiday travel boom due to not only extensive restrictions but the surge of COVID-19 cases that kept even domestic travelers closer to home. If hotels are able to welcome more tourists this holiday season, it could help many stay afloat.
Of course, it'll be interesting to see if eased restrictions lead to an uptick in international business travel -- something hotels need to return to pre-pandemic occupancy levels. Domestic business travel has lagged behind leisure travel in recent months, as many companies are still operating on a remote basis and are, if anything, delaying their office reopening plans.
All told, making it easier for international travelers to reach the U.S. is good news for hotels and the hospitality industry on a whole. And while it may take time for hotels to stage a complete recovery, this should help them get closer.