May 26, 2021

US Hotels Prepare for Memorial Day Weekend Demand Surge

Occupancy Could Reach 2019 Levels

U.S. hoteliers expect more guests for Memorial Day weekend this year as more people are vaccinated against the COVID-19 virus and restrictions and guidelines ease.

Memorial Day weekend hotel occupancy for 2020 was about 40%, which was significantly lower than normal demand around the holiday, but was notable during a time when there were several COVID-19-related restrictions in place, said Ali Hoyt, senior director of consulting and analytics at STR, CoStar's hospitality analytics firm.

The holiday provided "a five to 10 percentage point bump" in hotel occupancy, compared to the first three weekends in May, "which everybody was excited to see," she said.

Memorial Day weekend occupancy in 2019 was about 76%, which is more in line with expectations for the weekend.

Some U.S. hotel markets achieved a more normal occupancy level for the three-day weekend in 2020.

Data from STR shows Myrtle Beach, South Carolina, hotels had the highest occupancy for the holiday weekend at 80%, followed by Daytona Beach, Florida, at 77.7% and Gatlinburg/Pigeon Forge, Tennessee, at 75.3%.

With restrictions lifting around the U.S., Hoyt said it's possible hotels could get back to that 70% to 80% range for the holiday weekend.

Improving Trends Set Tone for Holiday Weekend

Leisure travel has dominated hotel demand throughout the pandemic, which is an encouraging sign for hotels during Memorial Day weekend.

On a call with analysts to report first quarter earnings, James Risoleo, president and CEO of Host Hotels & Resorts, said leisure travel drove 90% of the real estate investment trust's transient room nights during the first quarter.

He added that "pent-up leisure demand is evident in current holiday travel, which reflects lengthening booking windows and progressively higher levels of demand."

"For instance, at our Marriott International-managed leisure market hotels, occupancy on the books improved by eight percentage points nine weeks out from Memorial Day compared to where those hotels were nine weeks out from Presidents Day," he said.

Most properties in the Davidson Hotels portfolio won't reach occupancy close to 2019 levels, but the brand's performance has shown "an improvement from the previous four- to six-week trends," Jerry Stafford, regional director of revenue management for Davidson Hospitality Group's heritage brand Davidson Hotels, said in an email interview.

Hotels in states with fewer restrictions such as Tennessee, Georgia, Florida and Texas will be the exception, and could equal or exceed 2019 occupancy, he said.

Capturing Last-Minute Bookings

The Skyline Lodge in Highlands, North Carolina, was slated to reopen on May 28 after a yearlong renovation, but has pushed back its opening date to June, said Scott Neslage, director of revenue management at Indigo Road Hospitality Group. Indigo Road owns the hotel.

Since The Skyline Lodge was going to open right before Memorial Day weekend, the plan was to fill the property with last-minute demand, he said, which is a strategy that could be applied to last-minute bookings in the future.

Neslage said the hotel has a four-part strategy to attract last-minute guests, with the most important piece being to get noticed. The hotel built an audience in advance of the reopening by establishing a presence with market-level websites such as the local Chamber of Commerce site, he said.

He added that The Skyline Lodge is also building anticipation for its reopening among its followers on social media by sharing updates about the property and its offerings.

"As soon as we're ready to open the doors, we have guests that are primed and eager to book with us to give us the best chance possible [to capture last-minute demand]," he said.

Staffing Amid Labor Shortage

Another challenge facing hotels as demand ramps up for the holiday weekend and summer is staffing appropriately despite a widespread labor shortage.

Stafford said "staffing for hourly staff is at a critical juncture."

"Utilizing managers and any available staff to work as a team will ensure that the guests receive excellent services and accommodations," he said.

Copyright 2021 CoStar Realty Information Inc. All rights reserved. From https://www.costar.com. By Danielle Hess, Hotel News Now.

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