Atlanta hotel industry recovery not likely until second half of 2021

Credit: Ben Gray

Credit: Ben Gray

During the coronavirus pandemic, Atlanta hotels have lost out on business from conventions, occupancy is less than half of what it’s been, and it doesn’t look like much relief is in sight until the second half of 2021.

That’s the grim assessment presented Friday by Atlanta Convention and Visitors Bureau president and CEO William Pate during a virtual presentation to the Georgia Hotel & Lodging Association.

“It’s important to understand the carnage,” Pate said. Overall, Atlanta hotel occupancy rates for 2020 will probably end up at around 36% to 39%, he said.

The situation is so dire that 71% of hoteliers surveyed by the American Hotel & Lodging Association said they would not make it another six months without more federal aid. And 77% said they would have to lay off more workers without additional federal funding. More than one-third of hotels surveyed expected to face bankruptcy or be forced to sell.

Nationwide, hotel occupancy in urban markets was 34.6% in early November, the AHLA said. About 63% of hotels have less than half of their normal staff working full time, according to the survey responses.

While there’s hope for a boost over the holidays, “We’re worried about December and this spike in COVID,” Pate said, which may cut into business. The Centers for Disease Control and Prevention has advised Americans stay at home over the holidays.

Among the big events that could draw visitors to Atlanta in upcoming weeks are the SEC Championship game at Mercedes-Benz Stadium Dec. 19 and the Chick-fil-A Peach Bowl on Jan. 1. Attendance at both would be limited to 25% of normal capacity, Pate said.

Like many other businesses, the travel industry is pushing for another round of federal stimulus funding. In addition to hotels, small businesses that support the convention business — such as shuttle operators, caterers and florists — have “really been significantly impacted as well,” Pate said.

Commercial real estate firm CBRE’s senior economist Bram Gallagher said during the presentation that some of the cities that have suffered the most from lost travel business are big convention cities like Chicago. That might benefit secondary markets or less-crowded markets — including Atlanta, he said.

Another round of stimulus funding that puts more money in the pockets of consumers also could prompt more business generally, Gallagher said.

Looking forward, Pate said, there’s hope. Some conventions are already booked for 2021, mostly later in the year.

“We’re going to have a tough start of the year,” Pate said. “December and the next four months are going to continue to be difficult.” He said corporate travel restrictions likely will remain in place in the first half of the year.

But next summer and beyond, he predicted that “things will begin to pick up.” As Delta Air Lines adds flights back, that could also bring more people to Atlanta.

“The rebound is going to come, and we believe it’s going to come mid-year,” Pate said.

Getting back to 2019 levels, however, could take longer. Pate expects it will be 2023 before hotel occupancy is back at pre-pandemic levels.

That would still put Atlanta’s recovery a little faster than the national average, according to Gallagher. “Atlanta is going to do better, we think, than the nation as a whole,” he said.