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Travel, Employment, Supply Chain Issues All Impact Hotel Sector, Says CBRE Report

International travel restrictions are hurting the U.S. hospitality sector. This year, there has been considerably less international travel spending in the country than pre-pandemic with August 2019 seeing around $12 billion in spending versus around $2 billion in August 2021. Source: CBRE Hotels Research, Bureau of Economic Analysis and the National Travel and Tourism Office.

DALLAS — Since the COVID-19 pandemic began there have been many changes in travel, employment and supply chain issues, all of which have an effect on the hospitality sector, according to the U.S. Hotels State of the Union: CBRE Hotels Research Report. Dallas-based CBRE released the report earlier this month.

Travel rebounds

Regarding travel, the sector seems to have picked up momentum. CBRE says air travel is above 80 percent of pre-COVID-19 levels after high levels of travel during Halloween this year. Also, hotel cancellations have remained fairly steady since the beginning of the pandemic. In March 2020, there was a huge spike in hotel cancellations, but since then, cancellations have remained fairly low for most of 2021 with a slight increase in July 2021.

Additionally, international travel restrictions are hurting the U.S. hospitality sector. This year, there has been considerably less international travel spending in the country than pre-pandemic with August 2019 seeing around $12 billion in spending versus around $2 billion in August 2021.

Another change since the pandemic is that most of the inbound travelers are now coming from Latin America, with the top border entrants from Mexico, Colombia, Peru and Ecuador in August 2021. Two years prior in August 2019, the top countries visiting the United States were Canada, Mexico, United Kingdom and Japan.

Employment nears full recovery

CBRE reports that employment will be completely recovered by the second quarter of 2022. Additionally, CBRE predicts the majority of the markets across the country will return to 2019 employment levels by 2022, with Austin, Salt Lake City and Tampa in the lead. The organization also reports that college-educated employment among those with a bachelor’s degree or higher has fully recovered to its pre-pandemic numbers.

In the construction sector, the CBRE report found that construction wages increased by 7.7 percent, from approximately $28.69 per hour in October 2019 to $30.90 per hour in October 2021. On the flip side, however, construction employment is 3.5 percent below what it was pre-pandemic.

Despite the hospitality sector struggling, job openings per hotel are still above the pre-pandemic peak in February 2019. Hotel wages are also up 12.5 percent year over year as of October 2021.

Many people in the workforce are still working from home today. The CBRE report compared the annual commuting costs, percentage of remote-work friendly jobs and the percentage of workers that were remote before the COVID-19 pandemic started. The report found that the markets with the greatest prevalence of virtual work were Washington, D.C., San Francisco, Austin, Denver, Raleigh, San Jose, Atlanta, Phoenix, Seattle and Sacramento. CBRE reported that those cities have high amounts of virtual work because they are big tech markets, which are capable of doing more virtual work.

Among the markets with less opportunity for virtual work were Richmond, Salt Lake City, Miami, Columbus, Cincinnati and St. Louis. The Midwest tends to have fewer high-tech jobs and so therefore there are fewer opportunities to work from home. The report also said that those particular markets in the Midwest tend to have more manageable commute times, which encourages office use.

Supply chain stalls

Supply chain disruptions have persisted due to COVID-19. There was a 2.3 percent average of supply chain growth in 2021, with the highest growth in markets such as Austin, Charlotte, Nashville and Tampa.

Additionally, construction inputs such as wood, steel, iron and lumber continue to be hot commodities. In October 2021, steel and iron were 81 percent above the average for the producer price index, while lumber and wood products were still 18 percent above the average for the producer price index. The CBRE report indicated the future may have headwinds for steel and lumber, but lumber declines may soften the amount that the price increases.

— Julia Sanders

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