The U.S. hotel industry closed out 2020 with a slight performance improvement in December, but several class segments continue to lag the rest of the industry as the COVID-19 pandemic continues into another calendar year.

December RevPAR declined 51%, a slightly better performance than in November, which left the full year essentially unchanged. ADR decreased 27.6%, basically in line with the prior months, hinting at mix shift and really no pricing power, except maybe for luxury hotels. All of this is to say that not a lot has changed, and owners are still trying to survive.

Americans traveled for the holidays, according to the Transportation Security Administration, but most did not stay in hotels. New Year’s Eve generated some hotel demand; however, COVID-19 cases are spiking, and that will keep leisure and business travelers off the road for a while.

Outside of New Year’s Eve, the December data was basically in line with the prior months. High-end hotels were still 75% empty. Occupancy was dismal across the board. Drops in luxury room rates are still relatively better than elsewhere, pointing at a continued, faster recovery for the very high end as the American consumer landscape further bifurcates between the “haves and have-nots.”

Why do we expect that high-end hotels will continue to do well? Adam Sacks and Aran Ryan from Tourism Economics shared this slide that is super fascinating:

High-end households are the drivers of lodging spend, to the tune of 59% of total spending. U.S. consumers are saving more. It’s not a big surprise; if you have a dollar, you can either spend it or save it. The economy is struggling, so people spend less — ergo they save more. Now, unemployment has hit lower-income brackets harder, so they will likely use their savings for essentials. But for higher-income earners, buying “stuff” is not that attractive, so they are waiting for their ability to buy services again — including travel. So, there is potential for material upside if you are positioned on the high end of the spectrum.

Since these are the fourth-quarter and year-end results, here are some data points that we only update every so often.

The total active pipeline count is decelerating and is now below where it was a year ago. The percent change trajectory is clear.

As I said elsewhere, if you have conviction that the industry at its core is healthy and will rebound, then meetings-oriented hotels might be a very good bet. There are so few of them in the pipeline, and only 1.6 million square feet of meeting space opened in 2020.

Well, what can I say that has not been said a thousand times? Hotel News Now columnist David Loeb called it our “annus horribilis,” quoting Her Majesty the Queen, and I am pretty much done with using the term “unprecedented.” As my usually sparkling self, I am a “glass half full” kind of guy, but these days hoteliers would do cartwheels were they half full. There is nothing redeeming about the year the hotel industry had to live through. Yes, the industry and its participants are resilient. Yes, a lot of owners kept their properties open and their staff employed. But the data is just so brutal that it will take a while for the psyche of the industry to repair and recover.

Demand dropped by over a third, rooms plummeted over 20% and RevPAR dropped by nearly 50%.

This marks the last month of the “Freitag’s 5” column on Hotel News Now, which started in late 2014, a lifetime ago, with this release. I will continue to write for Hotel News Now, of course, just in a different cadence. Thanks to the Hotel News Now team for supporting this effort and making the data digestible. Special thanks to Rachel Daub and all the other designers who gave me avatars; being an astronaut had been a lifelong dream of mine.

So, thanks for reading. It’s been truly my pleasure writing all these years.

Jan Freitag is the senior vice president of lodging insights at STR and national director for hospitality market analytics at CoStar.

This article represents an interpretation of data collected by CoStar's hospitality analytics firm STR. Please feel free to contact an editor with any questions or concerns.