When Will The San Diego Hotel Asset Class Recover?
Due to COVID-19, the hotel market across the nation has taken a significant hit. Analysts are projecting a 20-35% loss in asset value for the remainder of 2020. However, A new report from CBRE forecasts a full recovery of national hotel occupancy by 2022 and of average daily rate by 2023. San Diego is positioned to outpace the expected rebound period, with full recovery predicted by 2022.
In an interview with GlobeSt.com, Brandon Feighner, Managing Director of CBRE Hotels’ Advisory, stated “Overall, the economy was in really good shape before the recession hit. Occupancy was at an all-time high, so the fundamentals are still there once people can start traveling again. “We think that San Diego is better positioned than most given the abundance of leisure travel and attractions. Two-thirds of leisure travel in California is from Californians. We are starting to see that early return as things are starting to open up.”
In terms of room rate, he has yet to see a significant decrease as demand is being weaned by fear and also because most hotels have remained shuttered up until recently. “It is uncertainty and fear that is keeping people from traveling, so deep discounting won’t assuage those fears,” says Feighner. “In the short term, demand is down so far across the board, and a great majority of the demand in San Diego is discretionary. So, the market isn’t as dependent on business travel as L.A. or San Francisco.”