Orange County Partnership - News

Pandemic Has Devastated Hotel and Travel Sectors in U.S.

The American Hotel & Lodging Association has issued a rather sobering report on the state of the hotel industry in 2021 and the outlook for the hotel and travel sector in the coming years.


The report, released by the Washington, DC-based organization on Jan. 21, states that business travel is not expected to return to normal levels until 2024 and despite an increase in hires this year, the industry’s unemployment rate for this year will be nearly 19%.


Prior to the pandemic, Orange County was enjoying a boom in hotel development and the opening of LEGOLAND New York in Goshen later this year is expected to increase tourism traffic to the county and the need for hotel rooms.


The resurgence of COVID-19, the emergence of new strains and a slow vaccine rollout have added to the challenges the hotel industry faces this year. With travel demand continuing to lag normal levels, national and state projections for 2021 show a slow rebound for the industry and then accelerating in 2022.


The hotel industry experienced the most devastating year on record in 2020, resulting in historically low occupancy, massive job loss, and hotel closures across the country. Hotels were one of the first industries affected by the pandemic after travel was forced to a virtual halt in early 2020, and it will be one of the last to recover. The impact of COVID-19 on the travel industry so far has been nine times that of 9/11.


The pandemic has been devastating to the hospitality industry workforce, which is down nearly 4 million jobs compared to the same time in 2019, the association stated., While some 200,000 jobs are expected to be filled this year, overall, the accommodations sector faces an 18.9% unemployment rate, according to the Bureau of Labor Statistics. In addition, half of U.S. hotel rooms are projected to remain empty in 2021.


Business travel, which comprises the largest source of hotel revenue, remains nearly nonexistent, but it is expected to begin a slow return in the second half of 2021, the report stated.


Among frequent business travelers who are currently employed, 29% expect to attend their first business conference in the first half of 2021, 36% in the second half of the year and 20% more than a year from now. Business travel is not expected to return to 2019 levels until at least 2023 or 2024. 


Leisure travel is expected to return first, with consumers optimistic about national distribution of a vaccine and with that an ability to travel again in 2021. The report found that heading into 2021, consumers are optimistic about travel, with 56% of Americans saying they are likely to travel for leisure or vacation in 2021. While 34% of adults are already comfortable staying in a hotel, 48% say their comfort is tied to vaccination in some way.


“COVID-19 has wiped out 10 years of hotel job growth. Yet the hallmark of hospitality is endless optimism, and I am confident in the future of our industry,” said Chip Rogers, president and CEO of AHLA.


“Despite the challenges facing the hotel industry, we are resilient. Hotels across the country are focused on creating an environment ready for guests when travel begins to return,” Rogers continued. “AHLA is eager to work with the new (Biden) Administration and Congress on policies that will ultimately help bring back travel, from helping small business hoteliers keep their doors open to ramping up vaccine distribution and testing. Together, we can bring back jobs and reignite a continued investment in the communities we serve.”


The top findings from the “AHLA’s State of the Hotel Industry 2021” report include:


  • Hotels will add 200,000 direct hotel operations jobs in 2021 but will remain nearly 500,000 jobs below the industry’s pre-pandemic employment level of 2.3 million employees. 


  • Half of U.S. hotel rooms are projected to remain empty this year.


  • Business travel is forecasted to be down 85% compared to 2019 through April 2021, and then only begin ticking up slightly. 


  • 56% of consumers say they expect to travel for leisure, roughly the same amount as in an average year.  


  • Nearly half of consumers see vaccine distribution as key to travel.


  • When selecting a hotel, enhanced cleaning and hygiene practices rank as guests’ number two priority, behind price.