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There Is Room at the Inn for Hotel Investors After COVID-19

The pandemic will cause an unprecedented revenue decline, but long-term recovery makes this sector attractive at current prices.

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Editor’s note: Read the latest on how the coronavirus is rattling the markets and what investors can do to navigate it.

The world and especially the hotel industry have undergone significant changes since we published our hotel outlook in December 2019. The coronavirus pandemic has spread across the globe and caused travel bans, canceled large events and vacation plans, and slowed business travel. As a result, the hotel industry has seen a sharp decline in revenue per available room over the past month. We have adjusted our outlook to account for this decline and the likelihood of an economic recession in 2020. While we now expect the hotel industry to see 2020 revPAR declines over 30%, the virus will eventually pass and the industry should recover. The recovery won’t be as fast as the decline, but our expectations for revPAR growth over the next decade are relatively in line with our prior outlook, as there should be several years of double-digit revPAR growth.

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Kevin Brown does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.