Operating performance at low occupancy levels

As of April 12, 2020, CBRE Hotels Research is forecasting an annual decline in RevPAR of 46.0 percent across all U.S. hotels in 2020, wrote Robert Mandelbaum, director of research information services for CBRE Hotels Research, in his blog.

Based on CBRE’s annual Trends in the Hotel Industry survey of U.S. hotel operating statements, the previous greatest annual decline in RevPAR occurred in 1932 when the Trends sample suffered a RevPAR decrease of 24.7 percent.

The U.S. lodging industry is projected to achieve an annual occupancy level of 42.6 percent in 2020. To put this in perspective, the lowest annual occupancy level ever achieved by the CBRE Trends sample was 44.5 percent in 1933.

Occupancy levels are forecast to bottom out at 23.3 percent during the second quarter of 2020.  Reviewing the CBRE database of operating statements, it is virtually impossible for a hotel to generate a gross operating profit, let alone any earnings before interest, taxes, depre