Unprecedented disruption in the hospitality industry continues as travelers stay home amid the COVID-19 pandemic. Findings from AlixPartners’ latest research into consumer behavior suggest that this situation isn’t going away anytime soon. To safeguard their future, hotel operators could proactively pivot from merely surviving to achieving resiliency.

The travel sector counts among the hardest hit by the pandemic’s impact–if not the hardest. Consider the unprecedented levels of distress seen this year in the space. In September 2020, the industry still had over $20 billion in hotel commercial mortgage-backed security (CMBS) loans reported to be 30 or more days delinquent. Let’s put this in perspective: There were just $1 billion in delinquent hotel loans in December 2019. And during the financial crisis of 2008 to 2009, delinquent CMBS loans peaked at $13.5 billion – far less than the Fall 2020 figure.¹

True, the CMBS delinquency rate has fallen in weeks of late. However, this is largely due to forbearance grants in the hotel sector, borrowers’ being allowed to tap into reserves, and investment firms’ extending high interest loans to financially strapped operators rather than fundamental shifts in operating performance driven by the beginnings of a recovery.

What’s more, despite some improvement in in-country leisure travel over recent months, the industry remains severely depressed. For instance, the number of jobs in the sector has already dropped by 23%² during the crisis – and that’s just to date. Nearly 65%² of hotels remain at or below 50% occupancy, suggesting that many are under the breakeven threshold. Yes, US occupancy has improved since April’s lows of roughly 22% (figure 1). But RevPAR has been trailing at nearly half of last year’s levels (figure 2) and represents a deterioration that’s four times the impact of the 2008 to 2009 financial crisis.

hospitality figure1 hotel resilience 2020
hospitality figure2 hotel resilience 2020


Unfortunately, many industry experts are not forecasting a return to 2019 RevPAR levels until 2023 to 2025. For example, STR anticipates a demand and occupancy recovery by 2024, with RevPAR upticks to follow in 2025. While optimism around recent vaccine breakthroughs has many hoping the recovery horizon will be shortened, consumer behavior has likely been permanently altered. Additionally, there is large consensus that we are heading toward a different economy, one characterized by widespread battle over share of wallet.

AlixPartners’ consumer research on the travel sector further backs this up. Consumers in 7 major markets around the world say they have cut back on travel spending more than 14 other key consumer sectors during the pandemic (download the PDF to view figure 3). They also are more reluctant to return to travel and leisure activities than to other sectors, including restaurant dining and retail shopping. In fact, consumers in our survey said they don’t expect to resume activities such as renting a car or reserving accommodations through Airbnb until, on average, four to five months from now. Resumption of air or cruise-ship travel won’t happen for another six months, our respondents suggest (download the PDF to view figure 4).


of US consumers say they have already or intend to resume staying at hotels within a few months.

And for the hotel sector, only 12% of global consumers reported staying at such accommodations since the crisis erupted. As much as 44% of those who were not currently utilizing hotels (but typically do so) said they planned to wait a year or even longer before staying at a hotel, or they were unsure.

To be sure, uninterest in leisure travel has contributed to this suppression of hotel use. But a large portion of it stems from the severe pullback on business travel, of which a chunk may be permanently gone. For example, Global Workplace Analytics forecasts hold that as much as 25% to 30% of the US workforce will continue working from home for multiple days each week through the end of 2021. Further showing the extent of this decimation of business travel, the number of tickets that travel agencies sold to corporate customers was 85% lower than a year earlier for the week ending November 1. Although this has improved from the 96% decline in mid-April, there is still a long way to go toward a rebound.2

Download the PDF to view the full report.