Skift Take

It's a week of good news for major U.S. cities while Asia Pacific sends mixed signals on reopening, much to the economic detriment of countries without much of a domestic traveler base.

Skift’s Daily Lodging Report is a subscription-required, email-only newsletter read by anyone and everyone in the hotel investor, owner, and operator space, including CEOs of some of the industry’s top brands. With two separate regional versions, it covers everything from North America to Asia Pacific. The report itself, curated by founder Alan Woinski, boils industry news down to a quick, easy-to-read daily digest known for keeping readers up to date in an efficient, effective way.

Here’s a sampling of what the Daily Lodging Report provided to its readers this past week. If you’re not a subscriber, you should be. Don’t wait. Sign up now here.

Sunday, Nov. 21

After 20 months without a single guest in its more than 1,000 rooms, the Hyatt Grand Central in midtown Manhattan is now sold out on weekends through the end of the year. The reopening of U.S. borders to vaccinated foreign tourists is breathing life back into the hospitality industry, but a full recovery could take years, according to NYC & Company. Some of the most lucrative travel markets have not yet returned such as tourists from China. While hotels continue to reopen and return to business, more than 100 in the city will remain closed for good. New hotel construction has offset these losses, but a deficit of thousands of rooms won’t be available to travelers, resulting in booking shortages as demand increases.  For the hospitality industry, the return of international visitors is vital to its survival. The city’s official tourism and marketing organization said the pace of recovery is led by these leisure travelers. Foreign tourists are roughly 20% of all New York City visitors, but they spend more than three times the amount of domestic tourists. They are responsible for half of hotel bookings. New York City’s highest-spending international customers, travelers from China, won’t be making reservations anytime soon. The NYC & Company comptroller’s report shows that visitors from China spent nearly $3.3 billion out of the total $80 billion in tourist dollars in 2019.  Without business travel and tourism from China, the Hotel Association of New York City doesn’t expect a recovery until 2025. 

Skift Note: …And they said New York City would never come back. Sold out weekends through the end of the year at one of the city’s largest hotels doesn’t sound like a damsel in distress.

Monday, Nov. 22

The number of foreign visitors to Japan in October 2021 was 22,100 which is down -99.1% compared with the same month in 2019. Starting November 8th, short term (three months or less) and long term stays for commercial and employment purposes have been given entry permission in principle. New measures from October 1st had allowed arrivals with a valid vaccination certificate who would serve a 14-day quarantine period could depart quarantine on the 10th day after providing a negative test result. Considerations are being made for reopening entry within the year for the purpose of group tourism.

Skift Note: At some point, countries are going to have to come to terms with a compromise between Covid containment and economic feasibility. Too many other countries are doing this for ones like Japan and China to remain so walled off from the rest of the world.

Tuesday, Nov. 23

The South China Morning Post reported Hong Kong travelers will be able tocross into Mainland China without quarantine from the first week of December, earlier than initially expected. Unnamed Mainland sources told them the number of people allowed to cross is likely to be limited to a few hundred people a day initially and follows weeks of negotiations by the two sides. This is likely to coincide with China’s Olympic medalists visiting the city.

The Zhuhai government announced the validity period of Covid-19 virus test results for people entering Zhuhai from Macau would be extended from 48 hours to 7 days from today. Macau’s visitor arrivals reached 35,525 last Friday as the Grand Prix Macau and Food Festival were held. This is the highest daily visitor arrival figure since September 25 when Macau entered the state of immediate prevention.

Skift Note: Finally, some good news for China and its special administrative regions slowly beginning to reopen. Keep in mind: this is still a domestic travel win and not for international travel.

Deutsche Bank summarized their findings from the commentary of companies at their Gaming & Lodging Conference last week. First, they said it was very positive that investor attendance was up 60% versus their 2019 event, favorable for corporate travel and for investor interest in the two sectors. Most hotel REIT management teams expect urban markets to continue catching up to resort markets in terms of RevPAR performance relative to 2019 as 2022 unfolds. Occupancy is increasing in NY, but room rates are soft. Chicago and Boston have strong city-wide paces next year but there remains less optimism around the near-term recovery in San Francisco and Washington, DC. The vast majority of REITs are bullish this quarter versus last quarter. Capital return programs for both Marriott and Hilton are expected to resume in 2022. C-Corps noted a development environment that remains fairly solid at the present. DB said management teams overall noted group business has been somewhat disappointing but said they have not seem impacts to 2022 at this stage. DB noted group activity in 1Q22 does not look encouraging. Management teams broadly believe 2022 will have a higher mix of in the year for the year group business than prior to the pandemic. Transactional activity is expected to continue to be strong. Not one REIT management team said it sees its stock as a fair reflection of private market hotel valuations.

Skift Note: Major U.S. cities show signs of life, but this isn’t a lock-step march to a full rebound. Strong conference schedules will help during a time of uncertain returns to the office.

Wednesday, Nov. 24

Las Vegas SandsMarina Bay Sands in Singapore said they have seen an overall increase in bookings from overseas travelers coming through the Vaccinated Travel Lanes program. TTGAsia quoted a spokesperson as saying the travelers are particularly coming from Australia, the US, Malaysia, the UK and South Korea, most of whom are staying over November and December’s peak period. Singapore currently has quarantine free travel for fully vaccinated tourists from 14 countries and are expected to have 22 countries on that list by the end of the year.

Skift Note: Las Vegas Sands said their Singapore trophy asset can survive without Mainland Chinese travelers. This doesn’t provide many specifics in the way of financials, but it’s strong anecdotal evidence of how the company can get by after leaving Las Vegas for Asia … and Asia dragging in terms of the casino resort recovery.

PwC reported average daily rate is expected to drive RevPAR for U.S. hotels in 2022 to 93% of 2019 levels. Given the strength of demand during the summer, PwC expects annual occupancy for U.S. hotels this year to remain consistent with their May 2021 outlook, increasing to 57.1%. The bigger story is the significant lift in average daily room rates during the back half of Q2 and Q3; exceeding 2019 levels in each month of Q3. PwC now expects average daily room rates to increase 19.6% for the year, with resultant RevPAR up 55.1%, approximately 82% of pre-pandemic levels. The report also highlighted with slowing growth in vaccinations and waning consumer optimism as we head into the final month of this year, lodging’s recovery is expected to remain uneven. Despite hotel owners continuing to staff up with increasing demand levels, October unemployment for the hotel sector increased to 12.9%, from 11.0% in September, compared to the U.S. overall rate decreasing to 4.6%, from 4.8% the prior month.

Skift Note: Rate will accelerate the hotel industry’s recovery, as many hotel CEOs have already bragged. But occupancy has to kick in at some point — guests can only stomach inflated rates to a certain point.

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Tags: coronavirus, coronavirus recovery, daily lodging report, hotels

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