Hotels may take 2 years to recover
Average daily rates are likely to stay below pre-COVID levels even longer
Houston’s hotel market might not recover from the devastating blows dealt by the novel coronavirus and energy bust until 2024, according to commercial real estate firm CBRE.
Houston is likely to take longer to recover than will the nation and other major Texas markets because of complications in energyrelated industries, according to the company.
While cabins and Airbnbs in the Hill Country have reported a rebound in bookings, the business meetings, conferences, sports and other events that attracted visitors to the Houston area will take longer to recover.
“Drive-to leisure destinations are the first markets to show signs of recovery,” said Jeff Binford, managing director with CBRE Hotels Advisory, in an emailed statement. “When people can drive in their own car, go directly into their own room, they have a sense of control and safety. Hotels oriented toward group meetings will likely lag in recovery as meeting attendees get reacclimated to being close to large numbers of people.”
Downtown, where the lodging industry has taken a big hit from the loss of convention business, many hotels are putting together visitor packages hoping to lure locals who want a change of scene without taking the risk of traveling, said Holly Clapham-Rosenow, chief marketing officer for Houston First Corp., the city’s convention arm.
“The Galleria is slightly less affected than downtown because they don’t have a convention center and weren’t relying as much on that business,” she said.
Binford predicted that annual occupancy rates for Houston hotels will fall to 41 percent in 2020, and will take until 2024 until it nears 2019’s occupancy rate of 63 percent. He also expects average daily rates will stay below pre-COVID levels until 2024 due to competition with short-term rentals such as those found on Airbnb, meaning the revenue-per-available room will take at least four years to recover.
Bram Gallagher, senior economist with CBRE Hotels Research, called this year’s slump in the hotel sector “much deeper than anything we’ve seen in the past 80 years.”