Adam Sack's Tourism Economics Video Presentation — original pdf
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PLANNING FOR THE RECOVERY Adam Sacks President Tourism Economics adam@tourismeconomics.com November 2020 A nascent recovery and now a pause Significant recovery since April… but still down 42% -52%-87%-77%-55%-50%-43%-41%-42%MarAprMayJunJulAugSepOct-100%-90%-80%-70%-60%-50%-40%-30%-20%-10%0%Source: Tourism EconomicsNational monthlytravel spendingyear-over-year % change US RevPAR Growth: Fall Stall Total U.S 1/2018 – 10/2020 2.1 1.6 -51.7 -51.9 -47.3 -46.1 -49.1 -60.5 -71.0 -80.0 Apr Jan Feb Mar May Jun Jul Aug Sep Oct (Prelim) Source: STR. 2020 © CoStar Realty Information, Inc. 4 Austin has mirrored this trend 0%10%20%30%40%50%60%70%80%90%100%3/74/45/25/306/277/258/229/1910/1720192020Austin occupancy rate%, weeklySource: STR Transient visitors to Austin much more resilient -100%-80%-60%-40%-20%0%20%40%MarAprMayJunJulAugSepTransientGroupContractTravel segment room demandOccupancy rate, year-over-year % changeSource: STR But group and corporate travel matter more in the fall -51%-72%-56%-47%-49%-36%-40%-100%-90%-80%-70%-60%-50%-40%-30%-20%-10%0%MarAprMayJunJulAugSepAustinHotel OccupancyYear-over-year % changeSource: STR ...producing predictable outcomes by hotel class -58%-48%-40%-30%-16%-70%-60%-50%-40%-30%-20%-10%0%LuxuryUpscaleMidpriceEconomyBudgetOccupancy rate by classYear-over-year % change, 2020 Sep. YTDSource: STR …and by property size -27%-31%-51%-54%-60%-50%-40%-30%-20%-10%0%<75 rooms75-149 rooms150-299 rooms300-500 roomsOccupancy rate by property sizeYear-over-year % change, 2020 Sep. YTDSource: STR Three snapshots of the travel landscape Auto trips (-14%) Hotel room demand (-33%) Air pax (-69%) -100%-80%-60%-40%-20%0%20%40%JanFebMarAprMayJunJulAugSepTravel performanceYear-over-year % changeSource: TSA, Arrivalist, STR Travel confidence has stalled… and still a long way to go Where is the economy headed? Half of jobs restored; the other half will be harder Alphabet options for the recovery US recovery should continue into 2021 but will remain below par Scenario Headline Probability Rapid upturn Scientific advances boost confidence Baseline Return to lockdowns Financial crisis Vaccine in 2021Q1, economy rebounds in 2021 W-shaped recovery as global infections spike, reversing economic gains Deep downturn creates credit crunch 15% 40% 25% 5% The importance of fiscal aid -2,000-1,00001,0002,0003,0004,000Jan-20Mar-20May-20Jul-20Sep-20Nov-20Transfers to households (other)Unemployment benefitsOther incomeCompensationTotalUS: The incomerisk from expiring fiscal aidSource: Oxford Economics/Haver AnalyticsTotal personal income, changerelative to February, $bnIncludes tax rebates ($1,200 checks)Includes federal UI top-up ($600/week)ForecastLostWage Supplements Payment (5-weeks) Fed policy also acting as wind in the sails Savings provides temporary buffer, but it’s falling fast 05101520253035401960197019801990200020102020US: Personalsavings rateSource : Oxford Economics/Haver Analytics% incomeSeptember2020: 14.3% When will travel recover? Anatomy of a travel recovery Summer 2020 Begins 2021Q2 Begins 2021Q3 High income earners least impacted by the crisis 9.220.137.361.50255075100Earnings less than or equal to the25th percentileEarnings from 25th to 50thpercentilesEarnings from 50th to 75thpercentilesEarnings greater than the 75thpercentileUS: Share of workers who can telework by wage level, in % Source: Bureau of Labor Statistics/Oxford Economics Major reshuffling of the deck What happens if all international travel stops? Domestic opportunity 19 million more US outbound trips than inbound 97,49278,89618,597Outbound departuresInbound arrivalsTrip Opportunity020,00040,00060,00080,000100,000120,000Source: Tourism EconomicsUS Balance of Travel (2019, trips)Thousands US hotel room demand: down 39% this year However, next year will recover to 81% of 2019 demand levels Back to “par” in 2023 DemandUS, room nights, in millionsSource: STR; Tourism Economics1,1531,1821,2001,2281,2571,2817831,0361,2221,2871,33902004006008001,0001,2001,4001,60020142015201620172018201920202021202220232024Decrease from 2019 to 2021: 19.2% How do we advocate for the industry during this crisis? Leisure & hospitality sector has led job growth in Austin L&H employment in Austin Index (2010=100) 165 155 145 135 125 115 105 95 Source: BLS Austin L&H +59% Austin +42% US +16% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 But no sector has been hit as hard at travel Austin employment loss by industry % of industry lost since February 24% 13% 8% Leisure and hospitality Information Education and health services Government Other services Trade, transportation, and utilities Mining, logging, & construction Manufacturing Professional and business services Financial activities Source: BLS -15% -10% -5% 0% 5% 10% 15% 20% 25% …but now represents 70% of all jobs lost Austin: share of total employment loss % of all jobs lost since February 70% 23% 19% Leisure and hospitality Education and health services Trade, transportation, and utilities Government Information Other services Mining, logging, & construction Manufacturing Financial activities Professional and business services Source: BLS -20% 0% 20% 40% 60% 80% This should not be controversial Will there be an enduring legacy of this crisis? Gratitude. THANK YOU! Adam Sacks President Tourism Economics adam@tourismeconomics.com November 2020