Q1 2021
Hotels Struggled to Keep the Lights on in 2020
Monthly Occupancy Rates - U.S. Hotels
It has been one year since the COVID-19 pandemic took hold of the world and wreaked havoc on the economy. One of the hardest hit sectors in commercial real estate was undoubtedly hospitality. Hotel occupancy across the nation averaged 44% for 2020, down 33.3% from 2019, according to hotel industry research firm, STR.

STR data shows that the average daily rate (ADR) in 2020 was $103.25 per room, 21.3% lower than 2019 and the lowest since 2011. The U.S. saw the number of unsold hotel rooms in 2020 exceed those unsold during the worst year of the Great Recession. The number of unsold rooms surpassed 1 billion in 2020; in 2009, the number of unsold rooms reached 786 million.

Source: CoStar News, STR
Extended Stay Hotel
Resilient Extended-Stay

Extended-stay hotels in the U.S. proved to be resilient and performed better than the overall hotel industry in 2020, with occupancy rates at 60.5%. Research from The Highland Group reported that the economy extend-stay segment is the only segment that’s posted monthly gains in revenue per available room since February 2020. This segment also showed gains in occupancy and average daily rate, which resulted in revenue per available room (RevPAR) growth of 3.6% in January 2021 as compared to January 2020.

Recovery on the Horizon?

The hospitality industry is expected to begin rebounding this year as vaccines are distributed globally; occupancy in 2021 is projected to average 52.5%, an increase of only 8.5% from 2020. CoStar reported that U.S. hotel occupancy actually hit its highest level since March 2020, with hotels averaging 52.1% occupancy for the week ending on March 13th, 2021. In order to persevere, hoteliers' recovery strategies will require much thought and will vary significantly from market to market. 2019 was the single best year ever recorded for the hotel industry, so the damage from 2020 will take several years to repair; a full recovery is not expected until 2024.

Northern Colorado Hotel Sales
Hotel Sales Volume Price PSF Chart
Northern Colorado remained a fairly resilient market in 2020. From March 1, 2020 to March 1, 2021, there were 16 transactions in all of Larimer and Weld county, compared to 13 during March 1, 2019 to March 1, 2020. However, in 2020 the average sales price dropped to $3 million ($148 PSF), down from $4.4 million ($163 PSF) in 2019. Looking ahead at 2021, it’s predicted that actual sale prices will be 10-12% lower than their initial asking prices and in turn, cap rates will rise.

Source: CoStar
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Northern Colorado Home Prices Up, Inventory Slashed
Northern Colorado saw another year of increasing home prices across every community in 2020, with the average home price in Fort Collins coming in at $439,117. The average sales price in January was $466,250, up from $447,500 in December. There are multiple factors driving the home prices in Northern Colorado and scarcity of supply continues to be a main factor. In comparison to 2019, inventory in 2020 was reduced by 50%. The Group Real Estate predicts home prices will continue to climb in 2021, due in part to low interest rates and significantly low supply. Consequently, appreciation in market value is expected to average 5.4% in 2021. A balanced market is considered to have a six-month supply of homes for sale; several Northern Colorado communities have less than a one-month supply of homes for sale.
CoStar Market Reports - Larimer and Weld County
Q1 2021