Key indicators to watch in the U.S. hotel recovery in 2021

January 13, 2021

For the travel industry, 2020 ended simultaneously on positive and negative notes. While the news of approved COVID-19 vaccines helped to rally stock prices of the major travel companies, surging cases in North America and Europe began to trigger lockdowns and tighter travel restrictions just prior to the holiday season.

As such, the timeline for recovery remains inconsistent, with STR and the U.S. Travel Association predicting that travel will not return to pre-pandemic levels until the end of 2024. However, a modest recovery in 2021 is still expected for the U.S. hotel industry. Here are the key indicators and trends to watch for the year, as drawn from STR, Skift, as well as Pegasus’s recent U.S. Leisure Traveler Sentiment survey.

U.S. hotel forecast

According to STR’s latest U.S. hotel forecast, the industry should see a slight increase in occupancy levels this year, rising from 42.2% in 2020 to 52.2% in 2021, and a slight increase in RevPAR from $43.76 to $57.03. This would end 2021 at approximately 66% of 2019 levels, up from 50.5% in 2020.

Leisure travel intent remains strong

Despite the challenges of the pandemic, a significant percentage of Americans still traveled in 2020, and the recent surges and travel restrictions have not dampened the intent to travel, even if it has affected when and how often they actually travel. According to Skift Research Global Travel Outlook 2021, the percentage of the population that traveled remained consistent between 32% and 38% between June and November 2020, down from 46% and 41% in January and February prior to the U.S. border lockdown.

Of those that traveled, leisure travel has remained strong even as business travel has weakened.
Looking forward, we should expect to see these trends hold in the short term. In a recent traveler sentiment survey conducted by Pegasus, approximately three-quarters of Americans reported that they were planning at least one leisure trip in the first half of 2021, with the majority of those travelers (78%) planning one to two trips over the six-month time period, with the majority of those trips being domestic. Almost two-thirds of survey respondents reported that they were taking less trips than they normally would due to the pandemic.

Popularity of beaches and small town destinations will hold through 2021

In our U.S. traveler sentiment survey, we found that 48% of respondents were considering beaches or small towns/countrysides for at least one of their upcoming trips. Urban centers and national parks are also popular destination options, with each type being considered by just over a third of respondents. This data aligns with the findings of Skift’s U.S. Travel Tracker report for October 2020, which indicated that beaches and small towns/countrysides were the most visited types of destinations in the U.S. during the months of July to October 2020, followed by urban centers and national parks.

Travelers still prefer hotels to short-term rentals

Skift reports that short-term rentals outperformed hotels in 2020, with occupancy rates of rentals actually moving above 2019 levels in October 2020.

Despite this change, travelers still say they prefer hotels over short-term rentals by a measure of two-to-one. In our U.S. traveler sentiment survey, 65% of respondents reported planning or considering a hotel for their next leisure trip, while only 32% reported planning or considering a vacation rental.

Health and safety, along with flexibility, are the top deciding factors in choosing accommodations

According to our travel sentiment survey, the pandemic has seemed to influence the deciding factors that go into choosing and booking accommodation. The implementation of hygiene and public health measures (such as enhanced cleaning and required face masks) was ranked as one of the most important factors, with 28% of respondents ranking it as one of the top deciding factors and 38% of respondents ranking it as very important. Another important deciding factor for choosing accommodation is the ability to cancel or rebook without penalty, which ranked just above price and quality and/or star-rating of the accommodation in terms of importance.

Download our full survey report for more key indicators and trends

For a more in-depth look at U.S. travel intent, research and booking trends, along with marketing and revenue strategy tips for hoteliers, download our U.S. Leisure Traveler Sentiment survey report here.