LOOKING UP AGAIN – Three years after the start of the pandemic, Boston-area hotels are optimistic again – Rachel Roginsky, ISHC, featured in the Boston Business Journal
Boston-area hotel leaders are finally seeing room for optimism.
Boston Harbor Hotel General Manager Stephen Johnston. As we approach three years since the pandemic began, hotel occupancy rates continue to slowly come back. Relatively big progress was made in 2022, hotel managers said, and they’re optimistic about the new year. Signs mandating mask-wearing are few and far between. Those ubiquitous hand-sanitizer stations are largely gone, as are the floor stickers showing people how and where to stand six feet apart.
Nearly three years into the Covid pandemic, Boston-area hotels are starting to feel normal, and what’s more, they’re finally approaching pre-pandemic occupancy levels. Boston-area general managers say they’ve adjusted to the continuing slow pace of business and international travel, and have even found reasons to look forward to the new year.
“I’m going into 2023 quite optimistic,” said Stephen Johnston, GM of the Boston Harbor Hotel.
The numbers support his optimism: Pinnacle Advisory Group projects Boston and Cambridge hotels to hit 93% of 2019’s occupancy rates, and to exceed 2019’s numbers in two other categories: average nightly room rates, and revenue per available room, or RevPAR.
Pinnacle projects that Boston and Cambridge hotels will hit 76% occupancy this year, up from 70% in 2022 and from just 45% in 2021. Those numbers are good enough for Rachel J. Roginsky, principal and owner of Boston-based Pinnacle. “If we can get back to 76%, that would be fantastic,” said Roginsky. “We’ll still be lacking the corporate demand. It’s still not back yet, but I see it getting better. We’re not yet at 100%. We’re not anywhere near where we were pre-Covid.”
Catching up
Boston isn’t the only major market struggling to regain its pre- pandemic hospitality numbers, but it’s lagging most of the country’s other biggest markets. The Boston area’s year-over-year performance was worse last year than the median of the 10 largest metro areas in occupancy rates, average daily room rates and revenue per available room, according to an analysis of data from hospitality data and analytics company STR.
Experts say that’s attributable to a few factors. Boston is less of a vacation destination than New York, Los Angeles or Miami, leaving it more reliant on business travelers. It’s also seen would-be travelers choosing regions with looser attitudes toward pandemic precautions, such as Dallas or Houston, Roginsky said.
Boston-area hospitality leaders said they have reasons to be bullish on 2023, however. The region has made big leaps in key measurements since May 2022, when activity resumed following the Omicron surge. They’ve seen an encouraging number of bookings for business travelers, weddings and other segments.
And while occupancy rates are still lagging, hidden in that data is the 10% growth in rooms that have opened in Boston and Cambridge since the pandemic began. That includes more than 2,000 rooms at four properties that debuted or reopened in 2021: the Omni Boston Hotel at the Seaport, The Langham, The Newbury and the Hampton Inn/Homewood Suites in the Seaport. “You see numbers that rival what they were before the pandemic,” said Dave O’Donnell, the vice president of strategic communications for Meet Boston, formerly known as the Greater Boston Convention & Visitors Bureau. O’Donnell credited a renewed belief that in-person meetings and events are needed. Meet Boston is working to market the region as a good place to hold such gatherings. “We’re saying, ‘There’s no place like Boston to hold your meeting,’” O’Donnell said.
Marianna Accomando, the general manager of the Seaport Hotel, agreed that “people want to meet in person, especially those businesses that have had remote teams in place.” “There’s a strong desire for connection and bringing those individuals to the same place to engage with each other,” said Accomando. Hotels are also charging room rates that back up their confidence. An average nightly rate of $227, as measured by Cheaphotels.com this past fall, makes Boston the most expensive city in the country to get a room.
‘Bleisure’ is booming
Hotel managers pointed to last May as a key point in the recovery. That’s when many businesses started booking travel again, and people started booking leisure stays. Starting that month, hotel occupancy and nightly room rates were virtually in line with 2019. Another factor has been trips combining business and leisure, for which the awkward-sounding term “bleisure” arose. It’s been an unexpected boon for hotels, tacking on an extra night or two before or after a business trip. “We never used to see that on the scale we see now,” Johnston, the Boston Harbor Hotel manager, said of such trips.
Yotel, which opened in the Seaport in 2017, expects to benefit from the return of business travel, especially with more events expected this year and next at the nearby Boston Convention and Exhibition Center. “We feel confident that business is back,” said Julia Greenwald, Yotel’s sales and marketing director.
XV Beacon, a high-end Beacon Hill hotel, is still seeing a lag in international travel but is busier with corporate travel now, general manager Amy Finsilver said. “We’re much more hopeful than we were a year ago,” she said. In another sign of optimism, one of XV Beacon’s sibling restaurants, Mooo, has opened two new locations, in the Seaport and Burlington. “We foresee it being a much stronger year,” Finsilver said.
Trading masks for new markets
Hotels are also shifting where they’re looking for potential guests. The Boston Harbor Hotel, for example, is no longer advertising in Asian markets, which was popular for families visiting local college students before the pandemic. Instead, it’s marketing in the United Kingdom and Ireland, where bookings are strong despite weak exchange rates.
Some hotels have seen record numbers of weddings, which they said helped save their year. That was the case for Boston Harbor Hotel and Beauport Hotel in Gloucester, whose harborfront site has beat its pre-pandemic occupancy numbers. “We just finished our best year ever for the Beauport Hotel,” said Ray Johnston, the managing director of the Beauport Hospitality Group. The Gloucester hotel exceeded expectations for the year in large part due to a surge in the number of weddings. Beauport hosted weddings even on Thursdays and Sundays — and it’s begun booking Thursday weddings again this year, Johnston said.
Perhaps most visibly, hotels no longer sport the physical markers of the early-pandemic days. Plexiglas at front desks and signs advising mask-wearing have largely been removed. Far fewer guests ask about — or show concern about — safety precautions, even as hotel managers say they’ve kept as vigilant about cleaning as they have for two years. XV Beacon, for example, still uses a type of ultraviolet disinfectant called UVC light for 45 minutes between guest stays, and it seals doors with a sticker to show guests that rooms haven’t been entered.
It’s now a different type of unknown that makes the industry unsure of what to expect: a potential economic downturn. “Even a mild recession is still a recession, and travel does get cut,” said Roginsky, whose 2023 forecast factors in a slight economic dip. “I’ve been projecting for 30 years, and we’re usually off by just about a point. This could be off by 5 points. We just don’t know.”