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Airport traffic and hotel performance are occasionally surpassing 2019 levels thanks to leisure traffic. City attractions like museums and parks are packed again with visitors. Restaurant hosts have returned to scoffing at last-minute requests for Saturday night reservations.

U.S. cities are well on their way back from pandemic lows, and that’s a problem for the hotel industry’s major lobbyist group’s big-ticket request to Capitol Hill.

While the U.S. heralds the return of people to city streets, the urban rival from the pandemic also threatens the hotel industry’s push for Congress to deliver targeted aid to an industry ravaged by the health crisis.

“It’s a challenge, and there aren’t a lot of elected officials right now encouraging additional spending,” American Hotel & Lodging Association CEO Chip Rogers told Skift in reference to the multiple stimulus packages passed over the last 16 months. “But if you’re going to look at the full picture, you can’t just look at tomorrow. You have to also look at yesterday. These businesses are still struggling in many ways.”

Crowded streets on weekends present an optics problem in the AHLA’s push for the Save Hotel Jobs Act, a roughly $20 billion measure meant to assist hotel owners of all sizes still struggling from the pandemic downturn. But the lobbyist group notes things aren’t as hunky dory as recent weekly occupancy and revenue data suggests at the national level.

The AHLA emphasized in a report released this month that 21 of the 25 top U.S. hotel markets are in states of depression or recession because of their reliance on business travel. The study, using data from May, labels city hotel performance in a depression state because revenue per available room — the industry’s key performance metric — was down 52 percent.

“I’m not sure that there’s anything that is going to change materially until we get into the fall,” said Jan Freitag, senior vice president of lodging insights at STR. “There’s very limited corporate transient demand right now. Having that back is going to be a real indicator after Labor Day.”

Part of the disconnect stems from occupancy rates that are boosted by weekend trips that sometimes begin as early as Wednesday night in some markets like Las Vegas and Nashville. But many of the lights at hotels remain off mid-week in more gateway markets like San Francisco, Boston, and New York City that typically rely on international tourism and business travelers.

A City Surge

More recent data does suggest even struggling city hotels are benefitting from the increase in summer leisure travel. U.S. hotels outperformed pre-pandemic business for the week leading up to the July 4th , according to STR. Hotels in the top 25 markets averaged close to a 64 percent occupancy, according to the firm’s most recent data.

Analysts outside STR expect last week’s numbers, which haven’t been released yet, to be just as strong.

Rogers even admits there is a strong chance somewhere close to half of the cities mentioned in the report may no longer be in their extreme levels of downturn, largely due to the accelerated demand in recent weeks. Final numbers won’t be released until later this month.

“The problem still exists, mainly in our inner cities,” Rogers added. “There’s no question about it.”

Occupancies across the portfolio at Ashford Hospitality Trust, owner of hotels in many top 25 markets across the U.S., averaged 63 percent in June compared to in the lower 80-percent range for the same month in 2019, the firm’s CEO Rob Hays told Skift via email.

But the lodging trust’s overall revenue per available room was down 37 percent from 2019 levels. At the worst of the financial crisis in 2009, Ashford Trust’s RevPar decline was nearly 20 percent.

“The occupancy trends are definitely moving in the right direction, but they are still far from where we were in 2019,” Hays said.

The AHLA and hotel owners continue to push the need for targeted aid, given the overwhelming drop in demand and revenue last year. Many operators were only able to hold onto their assets due to the flexibility of lenders and federal support through measures like the Paycheck Protection Program aimed at smaller business operators.

Larger hotel ownership groups were left out of that program, and many of these owners operate larger hotels in major cities with uncertain futures heading into the fall when business travel would normally kick in. Some of these groups are beginning to realize targeted aid like the airlines got is becoming more elusive with each weekly occupancy report.

“Yes, I do think it is a headwind, whether deserved or not,” Hays said via email. “Given the lack of government response and help to our industry over the past 15 months, I’m skeptical that the legislation will get over the finish line.”

Somewhat of a Silver Lining

Further federal support may seem like a tall order, but there are positive signs for city hotels even if business travel doesn’t roar back quickly in the fall.

Initial projections during the pandemic were that leisure travel would come back first, then business travel, and finally groups and conventions. Leisure travel has certainly dominated the recovery so far, but there are signs group and convention business will leapfrog over business transient demand.

Hyatt was one of the first hotel companies to indicate this possibility, but the industry has rallied around the idea in recent months. MGM Resorts International currently has more group room nights booked for 2022 than it did in 2019, the company’s CEO William Hornbuckle said last month at Skift’s Hospitality & Marketing Summit.

The top five U.S. growth markets for group meetings and events last month were Chicago, Denver, Philadelphia, Phoenix, and Washington, D.C., according to meetings and events data provider Knowland. Only Phoenix wasn’t considered in a downturn in the AHLA report from this month.

“We all know in seasonal markets that leisure travel is going to slowly go away,” said Sebastian Colella, vice president of Boston-based hospitality consulting firm Pinnacle Advisory Group. “It’s not going to be back to where it was in 2019, but it does help just to have some of that loss supplemented with some events.”

Boston, typically one of the top-performing hotel markets pre-pandemic but now one of the worst, even has a robust fall as far as major events go. The city’s rescheduled Boston Marathon as well as the Head of the Charles regatta take place on two separate weekends in October. The city’s main convention center has 12 events booked across September and October after more than a year of decimated business.

There is even a very early sign of a corporate travel comeback for hotels along Boston’s Route 128 corridor, a significant hub for technology and life science companies, Colella added. But uncertainty remains around how much business travel demand will come back and when.

Some companies are bringing people back to the office after Labor Day while others are waiting until 2022 or even giving up their office entirely.

“Are things getting better? Yes, absolutely. It’s not a big surprise that there’s a slight uptick every week, in room demand and even in rate,” Freitag said of the top 25 markets in general. “But, if you are looking for something more meaningful, the answer is no, that doesn’t exist yet. We’re all focused on what happens in the fall.”

Photo Credit: Even cities with more pronounced impact from the pandemic like New York City (pictured) are seeing increases in hotel performance in recent weeks. pierre9x6 / Pixabay