ST. LOUIS — Hotels here, devastated by the coronavirus pandemic, are just now starting to recover and may not fully recuperate for another three years, analysts say.
The pandemic stalled new developments, like the Moxy Hotel in downtown St. Louis, and sunk business industrywide. New hotels that opened at the beginning of 2020, like Ballpark Village’s Live! By Loews, promptly closed when the pandemic struck. With ballgames, weddings and conventions all canceled, travelers were stuck at home — and hotel occupancy fell off a cliff.
Companies like Lodging Hospitality Management, which owns 20 hotels across the region including at Union Station, saw business plummet from about three-quarters full to more than 90% empty.
“I’ve been at it a long time,†said Bob O’Loughlin, chairman and CEO of LHM. “It’s something you could never dream up.â€
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The St. Louis hotel market was booming before COVID-19 hit. More than a dozen hotels were planned or under construction. At the end of 2019, occupancy and revenue per available room, key metrics that gauge the health of the industry, were at 66% and almost $74, near record highs. But the pandemic plundered the hotel market, which now won’t recover until at least 2024, according to new research from commercial real estate firm CBRE.
Hotel occupancy for the entire region fell nearly 46% in 2020. Revenue per available room fell nearly 59%. ÁñÁ«ÊÓƵ were the biggest declines the St. Louis market has seen since 2000, when CBRE began tracking hotel data. COVID’s impact was swift, gutting the industry in mid-March “almost overnight,†said Olivier Gompel, an executive vice president at CBRE Hotels Advisory.
“Virtually every major market was under lockdown for over a two-week period, and occupancy plummeted,†Gompel said. “Nobody’s ever seen it plummet that fast.â€
The local market nose-dived in April 2020, when occupancy fell to just 19.4% from 69.9% the year prior, CBRE data shows.
For Maryland Heights-based operator Midas Hospitality, which owns or operates 45 hotels across the U.S., the “business traveler all but disappeared†in 2020, said Linda Eigelberger, Midas’ senior vice president of operations and marketing.
“In March 2020, we hit nearly 20% occupancy, which was devastating,†Eigelberger said.
The decline in business led to thousands of layoffs and furloughs for area hotel workers.
“It’s tough when somebody says you can’t run a business but still have to take care of your people and debt,†said O’Loughlin, whose Lodging Hospitality Management laid off around 1,400 employees.
Operators are seeing signs that the worst may be behind them. Occupancy is growing at Midas and Lodging Hospitality hotels. The St. Louis Cardinals, a major driver of guests at O’Loughlin’s hotels, are back to full capacity at Busch Stadium.
CBRE research forecasts the region’s hotel occupancy in 2021 will be 48.8%, increasing to 61.4% in 2022. Revenue per available room is expected to grow 45.4% to $44.42 this year and to $63.57 in 2022.
The slow return to normal will be driven by leisure and business travel, said CBRE’s Gompel.
“People are itching to get back on the road, so there’s a lot of pent-up demand. I think we’ll start to see a lot more of that in the back half of the year and certainly in ‘22,†Gompel said. “There is a little bit of uncertainty because we never really had this type of situation.â€
A slew of new hotels are under construction, like Midas’ Residence Inn in Clayton. At least five hotels are in the planning stages from various developers, including Green Street Real Estate Ventures’ project in Midtown and Hawkeye Hotels’ Moxy Hotel in downtown St. Louis. In addition, construction delayed by the pandemic has restarted, like at the 185-room 21c Hotel Museum in downtown west.
But the key indicator that the hospitality industry has bounced back is when conventions, which bring thousands of people to the region, are booked.
“The big variable is the return of conventions,†Gompel said. “These aren’t events that you just rebook it three months later. It’s several years of planning.â€
The Convention and Visitors Commission is leading a $210 million expansion of America’s Center, home to many of St. Louis’ big-ticket conventions. The expansion will entail an additional 92,000 square feet of exhibit space along Cole Street, a 65,000-square-foot ballroom along Ninth Street and a new pavilion and public plaza.
In August, $105 million in bonds were approved to help pay for the expansion, which will be repaid by taxes from hotels. St. Louis County agreed to fund the other half of the expansion.
Kitty Ratcliffe, president of Explore St. Louis, the organization that operates America’s Center, said she’s heard from hotels and convention organizers that the hospitality industry will see a full recovery by 2023. Ratcliffe said two groups were in St. Louis last week to plan their events, and another group is in town this week.
