Hotel worker opening room door

Bouncing Back: a Hotel Industry Outlook for 2021

2020 was a challenging year for businesses in every sector, but the travel and hospitality industry was one of the hardest hit. After a decade of consistent occupancy between 50 and 75 percent, hotel occupancy dipped to 25 percent in April of 2020 and has still yet to rebound.

However, there is cause for optimism. Infection rates are dropping world-wide as COVID-19 vaccines become widely available. With another round of economic stimulus being discussed, which would put much-needed disposable income into the hands of people everywhere, we may see a boost in economic activity and spending. Taking all these factors into considerations, here’s what we expect to see in the hospitality industry in 2021.

Recovery Will Not Be V-Shaped

You’ve probably heard the term “v-shaped recovery” in the last few months — simply put, it describes an industry or economy that rebounds just as quickly as it fell. Unfortunately, this is unlikely to be the case in the hotel industry, for several reasons:

  • The initial shutdown and precipitous drop in occupancy was not a natural trend, but a sudden change in the global environment. Recovery from that drop will be much slower and more cautious, as individuals and governments are wary about their safety.
  • Unemployment will take a long time to recover. More than 22 million jobs were lost in 2020, and while around half of them have come back, thousands of businesses shuttered permanently in the economic downturn. Since the hospitality industry is closely intertwined with tourism, restaurants, and other businesses, the job loss will keep hotels from recovering as quickly as it might have otherwise.
  • Business travel is likely to stay low. While business trips constitute a relatively small piece of all hotel business, we foresee a permanent reduction in business travel. Businesses that have spent the last year working remotely have realized that remote events and meetings are far more efficient and cost-effective than traveling across the country, so they’re not likely to start flying again once they have the chance.

Adam Sacks, president of Tourism Economics, predicts that hotels won’t recover to their 2019 revenue levels until the first quarter of 2024 — though he believes that hotels will recover roughly 80 percent of their 2019 demand levels by the end of 2021.

Expect a Summer Rush

Summer travel has always been the busiest season for most hotels — specific niches like ski resorts excluded — until last year’s unprecedented drop. This year, we expect a significant rebound in summer travel across the United States. While the rollout of the COVID-19 vaccine has been off to a slow start, experts expect the logistical wrinkles to be ironed out soon, after which distribution and inoculation will be more widespread. The most conservative estimates predict that the majority of Americans will be vaccinated by mid-summer.

Once vaccination reaches the majority of Americans, we anticipate a significant rebound in vacation travel. People who have been cooped up and unable to travel will want to take advantage of newly reopened destinations, and individuals with extra disposable income after a year without dining out or vacations will be ready to spend it.

Talk to Phonesuite

Until the hotel industry fully recovers, hotels will need to continue tightening their belts, focusing on efficiency, safety, and providing the best possible experience for the guests that they have. Phonesuite can help.

A digital PBX system from Phonesuite can significantly increase the efficiency of your hotel, a crucial step while travel numbers remain low. Many hotel staff can work remotely, while those who need to be on-site can roam freely around the grounds and ensure that every guest gets the personal attention they deserve. A VoIP system also often offers lower costs and less maintenance than a traditional PBX. If you’re ready to upgrade your hotel’s communication system, talk to Phonesuite today.