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San Diego Area Hotels Expected to Show Signs of Recovery by 2021
After suffering the greatest performance declines in the history of the U.S. lodging industry during 2020, the nation’s hotels will benefit from what is expected to be a relatively rapid economic turnaround in 2021 and 2022. CBRE’s Hotel Horizons latest forecast foresees demand for U.S. lodging accommodations returning to pre-crisis levels in the third quarter of 2022. However, a lag in ADR growth will stall the recovery in RevPAR until 2023.
CBRE Hotels Research’s Jamie Lane says, “The U.S. lodging sector has been hit by two headwinds in 2020: a contraction in overall economic activity, and the need for social distancing. Accordingly, our current forecast calls for a 37% reduction in the number of room nights occupied in 2020 compared to 2019. There is some comfort knowing that travelers will be back on the road in full force within two years.”
Hotel occupancy levels across all hotel categories in the San Diego region are projected to drop to 44.7% in 2020, a year-over-year decline of 41.7 percentage points, but show a modest recover in 2021 to 62.6%. San Diego occupancy this year compares with 41% nationwide.
Consistent with prior recessions, the severe declines in demand have sapped pricing. ADR in the San Diego region is expected to drop 31.1% to $114.80 this year but inch up again 11.3% to $127.72 in 2021. Likewise, RevPAR is expected to drop 59.8% to $51.29 in 2020 but is likely to jump 55.8% to $78.89 in 2021.
CBRE Hotels’ Advisory Brandon Feighner adds, “The San Diego and Southern California region is a very popular lodging and hospitality market, especially with leisure travelers. We have sensed and are now beginning to see pent-up demand from people who are eager to get out of the house and enjoy a little time away.”
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