First, we must take a step back and ask why are people utilizing 2019 as a benchmark to healing?
NB: This is a post from Duetto
And the factor, as we all understand, is that 2020 information is worthless. A lot of hotels were closed, those that were open were running on low tenancies, with low staffing levels and with big pieces of inventory out of commission– either to assist in social distancing, or for deep cleaning, or because it simply wasnt worth marketing them– the need wasnt there.
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And for that reason 2019 became crucial as a criteria since 2020 information was not dependable. Now we are planning for 2022 and we should accept that 2022 is three years removed from 2019. That is not a fair comparison.
But theres more to this.
Lots of hotels found themselves catering to different clientele: homeless people, healthcare workers, essential workers, and so on. Market segmentation is really skewed..
2019 was the golden year. It was the best year ever for the hospitality market. In the United States, absolute ADR and RevPAR values were the greatest STR has actually ever benchmarked. According to STR, the industry also set records for supply (more than 1.9 billion space nights readily available) and demand (1.3 billion space nights offered).
We understand that perks and incentives are coming back and those are going to be predicated on year-over-year changes. We likewise understand that a great deal of the benchmarking services are telling us that year-over-year change is going to be more vital in 2022 than it was in 2021 (because 2020 data was so undependable).
In 2020, the very first two months of the year were much better than in 2019. Its just when March hit that the bottom fell out.
What we are hearing from Duetto users is that, while there is still a lot of unpredictability, 2021 has been rather supported in regards to segmentation, customer booking behavior, and demand patterns. And as such, hotels are moving back to benchmarking on year-over-year modifications.
Comparing 2019 to 2022 is like comparing Steph Curry to Michael Jordan, or Cristiano Ronaldo to Pele. We are comparing an existing player to one of the all-time greats. It makes sense initially, however as you go into it, its not a reasonable contrast.
Rebound, Recovery, or Restart?
And therefore 2019 became essential as a benchmark since 2020 information was not dependable. Now we are preparing for 2022 and we must accept that 2022 is three years eliminated from 2019. 2019 was the golden year. Comparing 2019 to 2022 is like comparing Steph Curry to Michael Jordan, or Cristiano Ronaldo to Pele. 2019 is in the past and fortunately 2020 will soon be a more remote memory.
What we need to consider is that this current cycle was brought on by an interruption, not a standard downturn. Its not a conventional healing. Saying that its going to take us 4-5 years to recuperate is almost an oxymoron.
Market analysts are informing us that it is going to be a while until we return to 2019 tenancy and ADR levels, possibly up until 2023 0r 2024. Nevertheless, ADR has actually held up, occupancy has not.
Its a reboot and its not following previous cycles: post 9/11, post fantastic economic crisis, what happened was tenancy started to return, and as soon as that demand begins to return then you have the ability to press rate. Right now, the industry is pushing rate. Prices have held throughout this entire disruption– tenancy has not, so its not an usual recovery, its not a normal cycle where were streaming through peaks and troughs.
Check out more short articles from Duetto.
We do understand from 2021 information that domestic leisure travel and those within a drive radius of hotels will stay fundamental. 2019 is in the past and the good news is 2020 will soon be a more distant memory.