On Wednesday, July 1st CARW heard from Doug Nysse with Arrival Partners, Andrea Foster with Marcus Hotel and Resorts, and Peggy Williams Smith with Visit Milwaukee to hear about Hotels & Hospitality and Commercial Real Estate. In February of 2020, we were experiencing normal occupancy rates; however, by the middle of March the almost the entire country saw occupancy rates below 50%. By mid-April the industry saw the low point of under 10% occupancy. At the end of May we are seeing gradual improvements. Hospitality was not alone as other asset classes like airlines, auto rentals, etc , were also experiencing huge downturns resulting in a complete collapse of REVPAR. REVPAR is Revenue Per Available Room which is used to track occupancy and rates as a common metric. This metric dropped by 80% in an extremely fast timeframe.
Across the industry, drive-to markets are coming back quicker as people utilize driving transportation vs flying. Leisure travel is the start of a rebound which is also different compared to other downturns. During previous recessions, hotels didn’t close. They would reduce rates due to decreased occupancy. During the pandemic, low rates didn’t necessarily matter nor drive increased occupancy. However, as people start traveling again, we may see a lot of deals to incentivize travel.
In 2019, the hospitality & tourism industry provided $3.3 billion dollars in consumer spending in the four county Milwaukee area. Currently unemployment in the hospitality sector is currently at 58%. The downturn in consumer spending has a huge economic impact on the industry.
Looking forward, across the board our presenters feel the industry will come back. Drive-to and staycation locations may improve earlier than other types of travel. Doug believes there will be a shuffling of personnel across the hospitality industry, ownership may change as hotels trades are likely to occur and some brands won’t make it; however, there is consensus that the industry as a whole will undergo acquisition, disposition, movement up and down the chain (with respect to hotel brands) – and will eventually be back.
When asked what Milwaukee business leaders can do to support the tourism and hospitality industry, Peggy Williams-Smith discussed the VISIT Milwaukee “Bring it Home” campaign which is directed at meeting organizers to hold local and regional meetings in Milwaukee rather than traveling. VISIT will work with businesses and association groups to pull together a safe and successful experience. More about the campaign HERE.
When asked to describe their view for the future of the industry on owe word – we heard “optimistic” , “positive” and “resilient”.
To view the full webinar click HERE.
To view the full powerpoint presentation click HERE.