From first place to MVP – A look at which U.S. markets “outperformed” in 2020
Once the COVID-19 pandemic reached the states, it was only a matter of time before the tourism industry saw the effects of stay-at-home orders, social distancing and other restrictions. What started as a solid year for the U.S. hotel industry soon took a turn, and April became the worst month on record for hotels in the country. Occupancy fell to 24.4%, when a year earlier, it reached roughly 68%. ADR dropped to US$73.18, and that, paired with the low occupancy, resulted in a RevPAR level of just US$17.85.
Luckily for hotels, the weather was heating up, and so was weekend leisure travel. Beaches and other outdoor locations, such as hiking areas, began to see visitors, mostly those who had easy driving access to these parts of the country. In June, the occupancy charts showed five of the top six markets were beach destinations. In July and August, Colorado Springs held first and second place, respectively, among all markets in the metric. In September, California markets reigned due to housing of displaced residents from the western wildfires.
It should come as no surprise that these drive-to markets, along with the California markets, were the standouts when looking at the full year.
2020 occupancy leaders among STR-defined markets:
1. Florida Keys (58.5%)
2. McAllen/Brownsville, TX (58.2%)
3. California North Central (57.0%)
4. California South/Central (55.0%)
5. Riverside & San Bernardino, CA (54.5%)
Colorado Springs, while a top performer in a handful of months this year, took the 7th spot at 54.0%.
You might be asking yourself, “where were the major metro markets on the list?” Week after week, the Top 25 Markets, while historically popular destinations for both business and leisure travel, performed worse than all other U.S. markets in terms of occupancy.
Tampa/St. Petersburg saw the highest occupancy among the Top 25 Markets at 50.8%, which ranked 15th among all U.S. markets. Phoenix was the next highest market, ranking 22nd at 49.8%.
While it’s interesting to see which markets took home the top occupancy prize, it’s also noteworthy to look at which markets performed closest to their 2019 occupancy levels. Shall we call them MVPs, perhaps?
The following markets saw just a 10-point occupancy difference or less from 2019:
1. Louisiana South
- 2020: 50.4%
- 2019: 54.1%
2. Texas East
- 2020: 49.5%
- 2019: 56.9%
3. McAllen/Brownsville, TX
- 2020: 58.2%
- 2019: 66.1%
4. Augusta, GA-SC
- 2020: 49.4%
- 2019: 58.5%
5. Georgia North
- 2020: 46.6%
- 2019: 56.2%
6. Texas North
- 2020: 50.0%
- 2019: 59.7%
While none of the aforementioned markets were able to make it past the 60% occupancy level, there is hope (and proof in historical data) that the U.S. hotel industry can slowly, but surely, recover from the worst performance year on record.
In late January, we released our first forecast of the year with Tourism Economics. While our forecast was downgraded from the previous November version, full recovery of demand remains on track for 2023, while close-to-complete RevPAR recovery is still projected for 2024. Occupancy in 2021 is projected to increase 16.6%, followed by a 24.2% jump in the metric for 2022.
As vaccine distributions become more widespread and travel confidence grows, so will U.S hotel performance, it’s just a matter of time.