New variants delay lodging recovery in 2022: Fitch Ratings

January 11, 2022: New waves and Covid variants have delayed revenue per available room recovery for the lodging sector worldwide, Fitch Ratings in its latest report says.

While such metric of sector performance will improve in 2022, it will remain around 30% below pre-pandemic levels, the report noted.

As per the rating agency, the recovery phase will last another four years, with the U.S. leading the rebound. Regions like south-east Asia, largely dependent on the return of international visitors, and Europe are lagging behind.

The hotel and leisure sectors remain among the most affected by the pandemic, with long-lasting consequences. Fitch forecasts an improving outlook in 2022, bar reinstatement of new pandemic-linked travel restrictions.

Leisure trips with a domestic focus in regional areas will continue supporting the turnaround, while business travel and events will be on a slower recovery path. The economy segment should remain strong in occupancy, although pent-up demand is also boosting luxury experience and interest for "once-in-a-life trips". Last-minute bookings will remain a dominant trend as long as unharmonized border restrictions continue. Longer stays due to work flexibility and incipient environmental awareness in decision-making are trends to consolidate in 2022.

While most hotels remained open in 2021, the experience gained in 2020, with growing cost flexibility and pricing discipline, as well as some retained public support helped diminish losses. However, growing inflation, labour market pressure and sharper competition from short-term rentals will pose new challenges to keeping profit recovery on track in 2022.

Fitch Ratings