NASHVILLE, Tennessee — Hoteliers often rely on three key indicators to gauge performance and the health of their business and the industry: Occupancy, average daily rate and revenue per available room. Many of the factors and variables that drive those metrics, however, are out of their hands.

Two CoStar hotel data analysts presented at the Hotel Data Conference on external forces that have bearing on hotel performance and the outlook for the industry. Those forces include office use and leasing, air traffic to and from U.S. and international markets, and stadium attendance and proximity to hotels.

Remote-working trends are sometimes presented as opportunities for hoteliers — as flexibility to work from anywhere enables business travelers to blend more leisure time into their work schedules. But fewer people in offices also can translate to fewer people traveling to meet them in their offices, and booking hotels in those cities, said Jan Freitag, CoStar's national director of hospitality analytics.

"The logic chain goes something like: People are in the office; business travelers go to those markets, stay in upper-upscale hotels and meet with the people in the office. Turns out, we all went home and work from our bedrooms. And now we're not sure if we're back in the office," he said.

That's especially evident in an analysis of the relationship between office leasing volumes and full-service hotel occupancy in major U.S. cities.

In San Francisco, for example, "as the office leasing numbers deteriorated sharply so did full-service [hotel] occupancy," Freitag said.

Part of what's dragging down those leasing percentages is the U.S. government has been shedding office space as fewer employees report to federal buildings.

"The government’s Accountability Office went to 16 Federal headquarter buildings in three weeks … and they just said, ‘Anybody here?’ And then they were able to count that and put them into quartiles," Freitag said. "And you see the office utilization in a federal headquarters, where the lowest quartile is some 10%, and the highest utilization is 50%. The implication is if you have a hotel close to those federal office buildings … you haven't seen the demand and you likely will not see the demand that you had seen in 2019."

Freitag said he has doubts on whether usage and leasing of office space will ever return to pre-pandemic levels, and that "obviously has implications on hotel occupancy."

"I'm not sure that we will see our rapid acceleration back to normal. Outside of those who are in the office five days [a week] — bless you — but are we back in the office ever again on Fridays? I'm not sure," he said.

Making matters worse for U.S. hoteliers is data that shows American leisure travelers are choosing destinations overseas, particularly across Europe, and international arrivals to the U.S. are not making up for that.

"We're seeing a significant outflow of international travelers to other countries and receive a significant lack of international travelers coming to the U.S.," Freitag said.

A lack of Chinese tourism to the U.S. might be less about traveler preference than it is about ease of access.

"From China to the U.S., Russian airspace is closed. You have to go around and it's super-complicated and super-expensive so people aren't doing it," Freitag said. "Eventually they're going to come back, but if you have a budget for 2023, early 2024 for the return of the Chinese traveler, I don't think so. Because as long as the Russian airspace is closed, it's really hard to get here."

There is a bright spot for U.S. hotels, and it emanates from the floodlights at large stadiums in markets with professional sports teams. Of course, it's not football or baseball or soccer, necessarily, that is driving that optimism, but rather Taylor Swift and Beyonce.

CoStar Director of Hospitality Market Analytics Colin Sherman studied hotel markets surrounding three U.S. stadiums — Nissan Stadium in Nashville, Los Angeles' SoFi Stadium and the soccer pitch at Q2 Stadium in Austin, Texas.

In general, the data shows that hotels in those markets performed better when their stadiums booked concerts rather than games. For example, when Nashville's Nissan Stadium hosted concerts, hotels achieved ADR of $369 and were at 87% occupancy. When it hosted games, ADR was $238 and occupancy was 66%.

"We know that Taylor Swift is single-handedly keeping our economy out of a recession," Sherman joked.

CoStar analysis also found that the proximity of hotels to these stadiums has an impact on performance — typically the closer they are, the higher demand and rates are. But that's not always the case.

The study shows that when SoFi Stadium hosted concerts, hotels in a five-mile radius charged higher average daily rates than hotels within three miles, but more hotel rooms were sold in the three-mile radius.

He called that the "siloed" effect, noting that parking lots take up roughly a mile around the stadium and most of the market's amenities — restaurants, for example — are farther out.

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