A New Dawn for California’s Hospitality Industry?
The 2020 pandemic year left the hospitality industry facing what seemed like a long road to economic recovery, as lockdowns had most avoiding travel. Hotel employees lost jobs and many hotels were either operating at diminished capacity or forced to shut down.
From January to June of 2021, however, California experienced a sudden hotel “purchasing frenzy” where buyers took advantage of the mercurial market costs and purchased at a record rate. Compared to 2020, this was a triple digit increase in only six months. While the world was (and is) not yet clear of the uncertainties that come with the pandemic, this would suggest that investors were pretty confident that the Covid misfortunes, for hospitality at least, would soon be a thing of the past.
Progress was not only seen among buyers and sellers during these months. Many hotel owners experienced increased revenue and occupancy rates surpassing 70% as travel increased with the lifted Covid restrictions. While these increased rates were not pre-Covid level, they were a remarkably positive upswing in numbers since 2020.
However, the spread of the highly contagious Delta variant in July 2021 may have presented an unpredicted setback to the progresses of the previous months. While hotel occupancies remain up, it is still unknown whether or not we are facing another shutdown. At this point, many hoteliers are holding their sighs of relief and taking a “wait and see” approach to the future.
With the holiday season approaching and travel expected to increase, the next few months will be critical in determining what will be in regard to a possible second shutdown. Although California’s climbing vaccination rate (currently at nearly 70%) is also an important factor, time will tell.