Hotels and retail were two real estate sectors hit hardest by the COVID-19 pandemic. However, they both appear to be showing signs of reaching pre-pandemic activity levels, Bisnow reports.
For hotels, the United States occupancy was recorded at 65.4% for the week of June 27 to June 3, according to hotel data specialists STR. The occupancy rate was only a little less, 10 basis points, than the same week in 2019. Meanwhile, the average daily hotel rate was 5.8% higher than in 2019 ($135.35). Revenue per available room was $88.51 in 2021, a 5.7% increase from 2019, per STR data.
Data varied depending on the hotel market, however. For example, only Phoenix and Detroit saw double digit occupancy increases (14 and 13.1 percentage points, respectively) among the top 25 U.S. markets compared to 2019, according to STR. Meanwhile the San Francisco/San Mateo market saw the biggest occupancy decrease compared to 2019—a 32% dip to 50.9%. The hotel market is slowly returning back to normal, but challenges remain, Bisnow reports. According to STR, U.S. hotels’ gross operating profit is currently 70% of 2019’s level.
“May was another step forward as more economic reopening and more demand pushed industry-wide profitability further upward,” STR Assistant Director of Financial Performance Raquel Ortiz said in a statement. “While the improvement is encouraging, many hotels are still experiencing financial difficulty, and even more are seeing staffing issues as evidenced by the stagnant rate of labor costs.”
Retail centers are also on the rebound
Placer.ai reported that shopper visits to indoor malls were down only 8.1% in June compared to 2019—an improvement from May when visits dipped 8.3%. Overall, it’s a significant turnaround from April, where indoor mall visits were down 15.7% compared to April 2019. The second quarter of this year was showed one of the biggest signs of improvement in the retail sector.
Outdoor retail center visits were down only 5.6% in June versus the same month in 2019. June was off of May’s pace, but visits fell less than a percentage point compared to two years ago. Placer.ai forecasts that retail will see another boost when back-to-school shopping begins, creating additional foot traffic.
“The 2019 iteration of Back-to-School shopping was especially successful, setting a very difficult bar to reach for the 2021 season,” Placer.ai Vice President of Marketing Ethan Chernofsky wrote. “If the visit gap continues to shrink, it will be an exceptionally strong sign for the retail sector. However, even if the gap increases, it may have more to do with the heights hit in 2019 than the pace of recovery in 2021.”
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