The COVID-19 pandemic brought business to a near standstill for some hotels in the U.S., but as more Americans are vaccinated, big demand growth is expected in 2021 and 2022.

During the "North America Regional Overview Forecast" session held as part of the online Hotel Data Conference: Global Edition, STR President Amanda Hite said the company's forecast from the end of January calls for demand to increase 18% this year and increase 25.2% in 2022. STR is CoStar Group's hospitality analytics firm.

The forecast was created on a base-case scenario of 60% of the U.S. population being vaccinated by June, she said.

The number of people being vaccinated is "really important. It's one of the key metrics we sat down and looked at as we talked about this forecast," she said.

Hite said demand will be leisure-driven, which has already been the case in the first quarter of 2021 and is expected to pick up in the second through fourth quarters.

Average daily rate is expected to increase 4.2% this year, and that growth varies by chain scale, she said.

Rates are forecast to decline in 2021 at upper-tier hotels in the U.S., but remain positive in the economy through upscale segments, she said.

Hite said ADR for 2022 is expected to grow at a rate of 8.2%, which will put the industry "back at an absolute value that's about 89% of our 2019 level." Revenue per available room is expected to grow 21.6% this year, she said.

Sheenal Patel, CEO of Arbor Lodging Management, said when his company budgeted for 2021 back in November, it anticipated a 20% to 30% increase in RevPAR for all of 2021 — even compared to January and February of 2020, which were not affected by the pandemic.

"What we saw was January and February [of 2021] did not perform where we wanted it to be ... but we're now seeing, in the last 30 days, our forecasts being a lot better than our budgets, and that's what we're expecting through April," he said.

Patel said he anticipates RevPAR for his portfolio will achieve closer to 30% growth by the end of the year.

When STR released its latest forecast in January, the country was reporting some of its highest COVID-19 case counts and vaccines weren't being rolled out at the rate they are today, so the company had "a pretty conservative forecast we could stand behind" in terms of ADR, Hite said.

"I'm happy to say that we were wrong," she added.

"For January and February 2021, the year-to-date numbers, we are basically in line," she said. "January was about 60 cents below the forecast, and then for February, the ADR was actually $1.70 or so above what we had forecasted."

On the demand side, Hite said the number of rooms sold has outpaced the projections.

For January and February, 131 million rooms were sold, well above the forecast of 108 million, she said.

"We're happy to see transient demand really starting to pick up," she said. "We've seen the news; people are flocking to destinations like Florida, and we think this is going to help the [first quarter to be] stronger than what we anticipated in the forecast."

Jess Petitt, vice president of analytics at Hilton, said the company's hotels are also outpacing expectations and "on a weekly basis, those expectations continue to improve."

"There's always going to be some sort of deep breath, no matter what cycle, where consumer confidence improves," he said. "We saw that deep breath."

Arbor Lodging's portfolio has started to outpace expectations in the past 30 days, but demand is dependent on location, Patel said.

Leisure demand is back in most markets, including on weekends in Midwest markets such as Indianapolis and Kansas City, he said.

The company is also starting to book group business in sectors such as government and health care, he said.

Given that leisure is still driving demand, STR predicts RevPAR won't reach 2019 levels until 2024.

Pent-up demand for leisure travel will help this summer, but group demand is needed for the industry to completely bounce back, Hite said.

"In the fourth quarter of this year, we expect group demand to still be down 40% to 50% compared to the fourth quarter of 2019," she said. "It will be 2022 before we start to see group demand really be able to help drive the recovery for the industry."

Group meeting restrictions for attendance will continue in a lot of destinations through the end of the year, and as a result group demand is "at a much slower pace of recovery than what we have on the leisure side," she said.

Petitt said Hilton is starting to see an increase in events already with many of them being hybrid events.

The long-term forecast for group business depends on whether there's going to be a fundamental shift in how people travel for groups or how they conduct business, he said.

Gross-domestic-product growth for this year is "heavily driven by stimulus spending and other drivers that may not come to our industry," but it's exceeding 2019 levels, so some may look at STR's current forecast as pessimistic, he said.

Petitt said it does look like demand will return faster than initially thought, but "what worries me most is the ADR side."

"As an industry, every time we have an economic cycle, we forget customers are not necessarily pricing the way we are," he said. "We should be focused more on willingness to pay than we are on what the price is at the hotel next door."

He added that the recovery could go faster than expected if hoteliers didn't jump to cutting rates.

"We'll find there is demand," he said, noting that attendees of virtual conferences would much rather be meeting in person.

Corporate travel drives room pricing for Arbor Lodging, and when that dried up, the company had to drop rates pretty significantly to attract leisure travelers, Patel said.

"We drove occupancy where we could through most of 2020," he said. "In the last two weeks, we're seeing the opportunity to start pushing rate again, but it's on the leisure side on weekends that we're able to start pushing rate where occupancy is picking up."