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The State of the US Hotel Industry during the COVID-19 Pandemic

By: Douglas Daly – June 8, 2020

The Coronavirus pandemic led to a huge shutdown of non-essential businesses which impacted the hotel industry greatly.  However, since late April as people gradually ventured outside their homes, this sector has shown a steady yet modest recovery.

Figure 1: YoY Hotel Industry Spend and Transaction Volume (Facteus)

As travel is greatly limited by ‘stay at home’ orders and a major recession is impacting consumers’ discretionary income, the industry is suffering through not evenly across all regions and all segments.  With Facteus’ 17+ billion transaction dataset of nationwide card spend data with nearly 50 major hotels identified, we provide a deeper understanding of the hotel industry.

 

Industry Performance by Hotel Chain

As in our other industry analyses, we applied a machine learning model (unsupervised clustering algorithm called Gaussian Mixture Model – GMM) to cluster business performance based on weekly sales relative to week ending March 1, 2020.  Though all segments are performing poorly, some perform much worse than others:

Figure 2: Hotel spend & transaction volume by cluster relative to March 1, 2020 (Facteus)

Though eventually being down 15-20% since the beginning of March is nothing to admire, Cluster 2 far out-performs the others.  The cluster’s members tell us that customers are looking for a deal.

Top performers: Airbnb, Candlewood Suites, Days Inn, Econo Lodge, Extended Stay America, G6 Hospitality (Motel 6), Hawthorn Suites, Homeaway, Quality Inn, Red Roof Inn, Super 8 Motels, WoodSpring Suites.

As one would now expect, the merchants whose week-ending May 17 revenue is still more than 80% below pre-pandemic levels also show a common theme.

Worst performers: Crowne Plaza, Disney US, Doubletree, Embassy Suites, Four Seasons, Hilton, Hyatt, Sheraton, W Hotel, Westin

Within major hotel chains, we see the luxury and premium brands within performing very poorly whereas the midscale and budget offerings show some signs of recovery.  For example, Hampton by Hilton and the Hilton Garden Inn are performing considerably better than the premium Hilton brands.

 

Hotel Industry by Region

Similarly, we applied our same clustering approach by US states and also applied our model to major metro regions.

Figure 3: Hotel spend & transaction volume by state cluster relative to March 1, 2020 (Facteus)

Clusters 0 and 1 perform the worst though cluster 1’s downfall seems to be delayed by a week.  Cluster 2 shows some recovery and cluster 3 performs much better still.  Much like our earlier studies in other industries, the best performing states are in the South and Southeast.

We then applied our state model to the 100 largest metropolitan areas in the US to view their performance relative to their state.  Typically, the metro area performs worse than the surrounding state with one key exception being Seattle, WA.  In that case, it performed much like the red or orange clusters, but had a particularly strong week in late May.

Figure 4 Weekly transaction count & spend by State cluster (Facteus)

The coming weeks and months should prove interesting for this sector, and we at Facteus will continue to track it in our reports and the data products we offer. Please visit FIRST.facteus.com often or follow us on LinkedIn or Twitter (@facteus) to be notified when we publish updates.

Appendix – List of Hotels in Study: AIRBNB; BAYMONT; BEST WESTERN; CANDLEWOOD SUITES; CLARION HOTEL; COMFORT INN AND SUITES; CROWNE PLAZA; DAYS INN; DISNEY US PARKS; DOUBLETREE; DRURY INN; ECONO LODGE; EMBASSY SUITES; EXTENDED STAY AMERICA; FAIRFIELD INN; FOUR SEASONS; G6 HOSPITALITY; HAMPTON BY HILTON; HARD ROCK CAFÉ; HAWTHORN SUITES; HILTON; HILTON GARDEN INN; HOLIDAY INN; HOMEAWAY; HOTELS.COM; HOWARD JOHNSON; HYATT; LA QUINTA; MARRIOTT; MICROTEL; QUALITY INN AND SUITES; RAMADA INN; RED LION HOTELS; RED ROOF INN; RESIDENCE INN; SHERATON HOTELS; SUPER 8 MOTELS; TRAVELODGE; W HOTEL; WESTIN; WOODSPRING SUITES; WYNDHAM