State of the Hospitality Industry October 2021
Can Polls Be Trusted Anymore?
Hospitality trade pundits tend to use polls to predict future travel trends. However, polls are subject to a margin of error and, as we’ve seen from past political polls, can be wildly wrong. Some polls released earlier this year paint a gloomy picture in terms of hospitality recovery in the face of the Delta variant outbreak but the actual data contradicts these polls and demonstrate a much more optimistic outlook. Let’s look at some of the facts.
TSA Data
While there was a report stating people would “likely postpone or cancel travel” heading into the US holiday season, the data suggests otherwise. In fact, the data from the TSA checkpoint travel numbers shows current travel nearing pre-pandemic levels. As of 10/11/2021, four of the last five days had exceeded 2 million travelers and show an upward trajectory heading into the heaviest travel days of the year. By comparison, TSA checkpoints hadn’t exceeded 1 million on any day during the same period of 2020. 2019 (pre-pandemic) numbers averaged approximately 2.5 million travelers during the same time. With vaccination rates continuing to climb, easing of restrictions, and likely positive guidance from the Centers for Disease Control, we expect to be at or very near pre-pandemic travel levels in the next 6 months. You can follow the daily TSA travel data here.
Hotel Stock Indexes Rise
The Baird/STR Hotel Stock Index rose 5.2% in September to a level of 5,167. Year to date through the first nine months of 2021, the stock index was up 13.0%.
“Hotel stocks rebounded strongly in September and finally broke their streak of six consecutive months of relative underperformance,” said Michael Bellisario, senior hotel research analyst, and director at Baird. “Delta variant concerns mostly subsided during the month, and hotel stocks benefited from higher interest rates and the broader market rotation that lifted all travel-related stocks.”
“The post-Labor Day period had been a source of consternation for the industry, but the early returns produced a pleasant surprise with group demand above 1 million for two consecutive weeks,” said Amanda Hite, STR president. “We did see a performance dip late in the month, but ups and downs are expected at this point in the recovery cycle. Overall, we estimate September demand at 93% of the 2019 comparable, and there were noticeable improvements in the major markets and corporate-dependent hotels. With leisure demand continuing to deliver, but business travel and groups progressing much slower, we do not expect recovery to kick into the next gear until next year.”
In September, the Baird/STR Hotel Stock Index surpassed both the S&P 500 (-4.8%) and the MSCI US REIT Index (-6.0%).
The Hotel Brand sub-index jumped 6.7% from August to 9,077, while the Hotel REIT sub-index increased 1.0% to 1,233.
International Travel Restrictions To Be Eased in November
The United States announced a new international air travel system, opening travel for all vaccinated foreign nationals in early November, including those currently impacted by the U.S. travel ban.
“This vaccination requirement deploys the best tool we have in our arsenal to keep people safe and prevent the spread of the virus,” said White House COVID-19 Response Coordinator Jeff Zients. “Vaccines continue to show that they’re highly effective, including against the delta variant, and the new system allows us to implement strict protocols to prevent the spread of COVID-19.”
Travelers will need to show proof of full vaccination prior to boarding U.S.-bound planes. A COVID-19 test will also continue to be required within three days of departure and proof of negative results must be shown. Enhanced contact tracing and masking will also be required, but there will be no quarantine mandate.
Nonetheless, the easing of restrictions all but guarentees a significant demand from our friends and family across the pond visiting the US in droves not seen in over 20 months.
Virgin Atlantic Website Crashes
The White House has plans to lift the 18-month blanket ban on foreign travelers from entering the country. The ban was introduced by former President Donald Trump at the start of the coronavirus pandemic. Demand for flights from the US to the UK is set to surge.
Virgin Atlantic said bookings soared 91 percent in the hour after the announcement.
Travel site Skyscanner saw an immediate reaction to the news. It reported a 54 percent increase in site traffic following the announcement compared to the same time the previous week.
The US is currently the seventh most searched destination globally on Skyscanner. The most popular dates searched by UK travelers on or around Thanksgiving on November 25.
The news was praised by airlines and travel experts. Shai Weiss, CEO, Virgin Atlantic said: “The US Government’s announcement that fully vaccinated UK visitors will be able to enter the US from November is a major milestone to the reopening of travel at scale, allowing consumers and businesses to book travel to the US with confidence. “As the UK forges its recovery from the pandemic, the reopening of the transatlantic corridor and the lifting of Presidential Order 212F acknowledges the great progress both nations have made in rolling out successful vaccine programs. The UK will now be able to strengthen ties with our most important economic partner, the US, boosting trade and tourism as well as reuniting friends, families, and business colleagues. We are thankful to the UK Government, the Biden administration, and our industry partners for their collaboration. “The US has been our heartland for more than 37 years since our first flight to New York City in 1984. We are simply not Virgin without the Atlantic. After 18 months of uncertainty, we cannot wait to welcome our customers back onboard, flying them safely to their favorite US destination.”
Sean Doyle, British Airways CEO and Chairman said: “Today’s news, which will see our two nations reunited after more than 18 months apart, marks a historic moment and one which will provide a huge boost to Global Britain as it emerges from this pandemic. “We are immensely grateful to the Prime Minister and his Government for all the hard work that’s gone into securing this deal with the US, and which builds upon last Friday’s announcement on the lifting of many travel restrictions. Our customers should now feel that the world is re-opening to them and they can book their trips with confidence.”
Earlier, Prime Minister Boris Johnson said he was “delighted” that US President Joe Biden is “reinstating transatlantic travel”. He added: “It’s a fantastic boost for business and trade, and great that family and friends on both sides of the pond can be reunited
Around 3.8 million British nationals visited the US every year prior to the pandemic, according to the Foreign, Commonwealth, and Development Office.
Summary
The above facts paint a rosy, optimistic picture leading us to believe that we are in a strong recovery and could even surpass pre-pandemic levels shortly.
To stay connected to exclusive hospitality and supply chain news, subscribe to our newsletter here
