When hotel chains go belly up, the hotel industry will be hit by a new wave of cancellations, lawsuits and bankruptcies
The number of hotel rooms booked in the United States has fallen to a six-year low as hotel chains struggle to compete in a new market dominated by Airbnb and other sharing platforms.
The decline was driven by a combination of factors, including rising rents and low occupancy rates in hotel rooms, according to a survey conducted by the industry group Hotel Industry Association.
A record 48.7 million hotel rooms were booked in December, a 14 percent decline from the previous month.
The number peaked at a record 45.9 million in November.
It was the lowest number since the peak in May, when the year-over-year decline was the biggest in the industry’s history.
While the industry is struggling to compete, it is seeing fewer cancellations than it did in November, when more than 1 million rooms were canceled in a single day.
The industry also has fewer hotel room holders than last year, with just 4.3 million, according the association.
But in spite of a fall in hotel occupancy, hotel companies are facing a barrage of lawsuits and other bankruptcies.
The lawsuits and bankruptcy filings will likely continue to be the biggest concern for hotel companies.
“This year, there’s been a big uptick in the number of cancellation lawsuits.
And we’ve seen that over the past several weeks, as the hotel business has continued to grow, we’ve been seeing more and more cancellations,” said David Loy, a senior vice president at consulting firm Towers Watson.”
We think there’s a lot of reasons for that, but one of the big reasons is that people are increasingly afraid to stay in hotels,” he added.
The hotel industry is a $5.2 trillion business, according its annual report.
It has experienced a 10-percent drop in hotel revenue since the end of 2013.
And the drop in occupancy has been particularly sharp, with occupancy rates falling for the second straight year.
Last year, occupancy rates were at about 65 percent.
This year, they are at just 54.4 percent.
In the last two years, occupancy fell by 2.6 percent.
“The hotel business is a tough one to compete against,” said Steve Hsu, an analyst at S&P Global Market Intelligence.
“You can’t just go to a new company and say, ‘Hey, I’ll do business with you.
I’m not going to sue you.’
It’s going to be a lot more difficult.”
While many hotels are struggling, the industry has also had some successes, including the hotel-motel revolution in New York, which has seen occupancy rates rise to a record 70 percent.
The rise of the hotel as a destination and an entertainment option has also helped boost sales, with the industry posting $4.9 billion in hotel room revenue last year.
The hotel industry has said it expects to have $7.2 billion in new hotel room openings in 2018.
The industry has not experienced any major changes in occupancy rates since it peaked in the mid-1990s, according Tokei Research, which tracks the industry.
But the drop has made some hotel companies nervous about operating the way they did in the 1990s.
“It’s a difficult business to run and operate,” said Chris Stahl, CEO of the hospitality firm The Walt Disney Company.
“It’s very hard to make the business model work.
There are lots of challenges, and there’s no guarantee you’ll be successful.”
Homes across the country have experienced a decline in occupancy as well, though the trend is less pronounced, said Peter Lefevre, chief economist at brokerage firm CBRE.
The number of people living in a hotel room fell by 11.5 percent from December to December 2017, and occupancy rates fell 7.2 percent from the same period last year to about 54 percent, according CBRE’s report.
Housing prices in the country are falling, too, and the number has dropped for the fifth straight year, according an analysis by the American Housing Finance Agency.
But the drop is more than offset by a rise in the price of other rental housing, according S&am’s report, which showed hotel occupancy dropped by 5.4% from November to December and occupancy fell 6.3% from the end for the same periods in 2017.