Hotel Industry Report 2021
AHLA
The hotel industry experienced the most devastating year on record in 2020, resulting in historically low
occupancy, massive job loss, and hotel closures across the country.
Hotels were one of the first industries affected by the pandemic after travel was forced to a virtual halt in
early 2020, and it will be one of the last to recover.1
The impact of COVID-19 on the travel industry so far has been nine times that of 9/11.2
In 2021, many challenges remain for the industry, including a resurgence of COVID-19 at the end of 2020,
new strains of the coronavirus, and a slow vaccine rollout. Travel is not expected to return to 2019 levels
until 2024.
Despite this, the industry is resilient, and hotels across the country are focused on creating an
environment ready for guests when travel begins to return in 2021.
Leisure travel is expected to return first, with consumers optimistic about national distribution of a vaccine
and their ability to travel again this year. At the same time, business travel—which comprises the largest
source of hotel revenue—remains nearly nonexistent, though it is expected to begin its slow return in the
second half of the year.
The following report outlines the forecasted state of the industry in 2021 and into the immediate future,
examining the high-level economics of the recovery, the specific impact on and eventual return of
business travel, and a deep dive into consumer travel sentiments.
56% Expect to Travel for Leisure; Business Travel Not Expected to Return Until 2024; Consumer Comfort with Travel Linked to Vaccine Distribution
Key findings include:
1. Hotels will add 200,000 direct hotel operations jobs in 2021 but will remain nearly 500,000
jobs below the industry’s pre-pandemic employment level of 2.3 million employees.
2. Half of U.S. hotel rooms are projected to remain empty.
3. Business travel is forecasted to be down 85% compared to 2019 through April 2021, and then
only begin ticking up slightly.
4. 56% of consumers say they expect to travel for leisure, roughly the same amount as in an
average year.
5. Nearly half of consumers see vaccine distribution as key to travel.
6. When selecting a hotel, enhanced cleaning and hygiene practices rank as guests’ number two
priority, behind price.
Hotels support millions of jobs across the country and are central to getting our economy back on track.
Prior to the pandemic, hotels were proud to support one in 25 American jobs—2.3 million direct hotel
operations jobs and 8.3 million hotel-supported in total—and contribute $660 billion to U.S. GDP.3 While
a full recovery remains years off and further relief is critical, the hotel industry will begin to rebound
starting in 2021.
Hotel Industry Outlook
The sharp and sustained drop in travel demand due to COVID-19 has taken an incredible toll on the hotel
industry.
With travel demand continuing to lag normal levels, national and state projections for 2021 show a slow
rebound for the industry in terms of hotel occupancy and revenue, employment, and state and local tax
contributions that will begin to accelerate in 2022.
While the industry is expected to see better results this year compared to 2020, the projections for the next several years remain significantly below pre-pandemic levels before leading up to a full recovery in 2024.
1. Hotels are expected to add 200,000 jobs but remain well below 2019 levels.
The hotel industry’s greatest resource is its workforce, the members of which are the heart of hospitality.
Yet in 2020, more than 670,000 direct hotel industry operations jobs and nearly 4 million jobs in
the broader hospitality industry were lost due to the pandemic.
As the industry begins the New Year, at least two in 10 hotel employees who were working in March 2020
are still not back on the job at all, while many more are not yet back full-time. Overall, the
accommodations sector faces an 18.9% unemployment rate as of December 2020, according to the
Bureau of Labor Statistics.
This figure understates a portion of the problem as there are many workers
previously employed in hotels that are exiting the industry and/or the workforce entirely. Oxford
Economics projects that the direct hotel industry jobs unemployment figure will exceed 20% in 2021.6
In 2021, employment in the industry is only expected to grow by 200,000 jobs compared to 2020, resulting
in a net loss of 478,245 hotel employees from pre-pandemic levels.
Down Of Top 10 States By Employment (2019 2020 2021 2022)
- United States 2,341,271 1,668,955 1,863,026 2,157,180
- California 292,566 201,589 225,397 268,098
- Nevada 191,479 148,040 169,197 179,017
- Florida 206,667 143,738 167,107 189,090
- Texas 151,481 121,894 131,734 144,419
- New York 116,106 64,724 78,078 102,070
- Georgia 57,288 44,955 47,802 53,487
- Pennsylvania 65,571 43,904 49,415 59,025
- Arizona 58,680 43,445 46,037 53,969
- Colorado 52,929 39,737 45,064 49,686
- Illinois 60,643 39,205 44,057 54,224
Hotel employment is unlikely to reach pre-pandemic employment levels until
at least 2023.
COVID-19 has forced hotels to reduce staff sizes and ask team members to take on additional roles. This
has been especially difficult for urban hotels, which are major employers due to their larger average
property size.
As urban and airport hotels have faced devastatingly low occupancy rates8, well below the national
average, a significant rebound in hotel employment will not occur until group and business travel returns
over the next several years.
In 2022, the number of jobs is projected to slightly increase compared to 2021, but the total direct hotel
jobs will remain 184,092 fewer jobs when compared to 2019.9 Moreover, the industry is not expected to
reach 2019 employment levels until at least 2023.10 This has eliminated more than 10 years of job
growth in the accommodations sector, according to BLS.
Hotel occupancy is projected to average just 52%, compared to 66% in 2019.
In 2019, the nation’s nearly 56,000 hotels experienced an average annual hotel occupancy of 66%,
selling 1.3 billion rooms.
The onset of the COVID-19 pandemic brought hotel occupancy to a historic low of 24.5% in April
2020.14 Annual occupancy in the United States fell to roughly 44% for the full year.15 Additionally,
the total number of rooms occupied fell by 458 million from 2019 figures.
Hotel occupancy in the United States for 2021 is expected to average 52.5%, an increase of only 8.5%
points from 2020.
Room occupancy is also expected to increase by 208 million rooms.
While some full-service hotels begin breaking even at 50% occupancy,
this does not account for mortgage debt service costs, leaving most hotels still well below their break-even point.
Encouragingly, occupancy rates are projected to rebound more significantly in 2022, reaching 61.4%,
and the number of rooms sold is expected to reach 1.23 billion, nearing 2019 levels.21
Hotel room revenue is anticipated to reach just 65% of the 2019 total in 2021
Prior to the pandemic, the hotel industry’s 5.3 million guest rooms22 generated $168 billion in annual
room revenue, not including the additional tens of billions generated by meeting rooms and other
ancillary revenue sources.
In 2020, hotel room revenue fell by nearly 50%24 across the U.S. to just
$84.6 billion.
Room revenue is anticipated to increase by only $25.9 billion this year, still 34% below 2019 levels.26 In
2022, room revenue is projected to rebound a bit further, hitting an estimated $144 billion, but still well
below 2019 numbers.27
Business Travel Outlook
Corporate transient business and broad demand for groups and meetings remain a serious concern in
2021. While leisure bookings provided a bit of a cushion for hotels over the 2020 summer season, business
travel—which comprises the largest source of hotel revenue—essentially ceased and remains nearly nonexistent.
Business and group travel are not expected to begin their slow return until a COVID-19 vaccine
is widely available in the second half of the year.
The recovery of the travel industry is anticipated to take place in three phases: leisure travel, small and
medium events, and group and business travel. While recovery will begin in 2021, full recovery is not
expected until 2024.
1. Business travelers are driving the return to leisure travel.
While business travel itself will remain below 2019 levels, business travelers express greater comfort in
traveling for any reason compared to adults overall, and they are more likely to say they will travel more
in 2021.
In a January 2021 survey of frequent business travelers, 42% of respondents said they are already
comfortable staying in a hotel, while 52% say their comfort staying in a hotel is connected to vaccination.32
Among frequent business travelers, 62% expect to travel more for leisure and 51% expect to travel more
for business compared to last year.
