The revival of the hotel sector continued its upward trajectory in Q4 2021, but labor shortages persist as hotels have trouble filling hourly positions with low-wage workers.
Key hotel metrics closed 2021 with a steady surge, including demand, which increased 40.3 percent compared with a year ago; occupancy, which rose 38.3 percent; revenue per available room (RevPAR), which jumped nearly 100 percent; and average daily rate (ADR), which grew 44.4 percent, according to CBRE’s US Hotel/Q4 2021 report, released this week.
CBRE put this rosy year-to-year comparison into perspective by comparing the Q4 2021 hotels results with pre-pandemic levels in Q4 2019: Q4 2021 demand is 5.9 percent short of pre-pandemic demand and occupancy is 7.8 percent less than the level in Q4 2019.
Seven of the top 10 performing markets in CBRE’s Q4 Hotels report were in the South and three were in the West, with the majority of markets reporting RevPAR exceeded pre-pandemic levels by 14 percent.
Luxury hotel properties continue to have a robust recovery, the report said, with only 1.5 percent of luxury hotel properties remaining closed at the end of 2021, down from 13.7 percent at the end of Q1 2021. Luxury hotel closures peaked at 54 percent during the initial Covid-19 outbreak in April 2020.
The surge in hotel demand soon will be reflected in hotel rates, which are expected to increase 13 percent globally in 2022, according to the Global Business Travel Association’s annual forecast. GBTA also projects global hotel rate increases of 10 percent in 2023. Hotel rates sank globally by 8.3 percent in 2020 and 17.7 percent in 2021 during the pandemic.
CBRE’s Q4 Hotel report said labor shortages “remain a headwind to full recovery, with hourly hotel wages more than $9 less than the national average wage.”
During the pandemic, hourly hotel workers have been quitting large numbers, seeking higher-wage jobs and creating what analysts call a “wage-driven labor shortage” in the hotel industry. During November’s so-called Great Resignation, an estimated 1 million hotel and restaurant workers left their jobs.
Leisure and hospitality remains the lowest-paid industry tracked by the Bureau of Labor Statistics, despite an uptick in wages for hourly workers in 2021. BLS reported average hourly earnings of $19.20 in the sector as of November 2021, a $2.30 increase over pre-pandemic averages.
A study issued by the American Hotel and Lodging Association projects a hotel workforce of 2.19 million by the end of 2022, which is about 93 percent of the pre-pandemic workforce.