A new study by the American Hotel & Lodging Association says hotel room revenue and state and local tax revenue are expected to exceed 2019 levels by the end of the year. For the first half of the year, Indiana had already returned to pre-pandemic levels, with tax revenue up nearly 12 percent and hotel room revenue up 15 percent. Patrick Tam, CEO of the Indiana Restaurant and Lodging Association, says the numbers are ahead of schedule, as many forecasts call for revenue to return to normal only in 2024.
In an interview with Inside INdiana Business, Tam said there are always “haves and have-nots” in the hospitality industry.
“Indianapolis hosted more events, more trade shows, more conventions than any other city in the United States last year in 2021. That’s something to be proud of,” Tam said. “The second half of this year for downtown Indianapolis and indeed our trade show and convention business is looking very strong. [It’s] will be down a bit from 2019 levels, but to be honest, [it] looks very strong. At the same time, however, business travel has declined significantly and is still falling.”
In the Indianapolis central business district, Tam says business travel is only 40% at best on a Monday or Tuesday night, meaning it could be low in areas like Fort Wayne, Evansville and other parts of the state.
AHLA’s 2022 Mid-Annual State of the Hotel Industry Report says that nationally, 47% of business travelers have extended their business trip for a vacation in the past year, and 82% say they are interested in doing so in the future .
“We’re seeing some of that. We’ve never been a particularly strong leisure market in the business traveler sense, but some of that is happening. I am encouraged by the state and the Indiana Destination Development Corporation, their aspirations for IN Indiana. We really need to improve our brand as a country, not just for travelers and business decision makers, but for everyone.”
Nationally, the AHLA report projects hotel room revenue to exceed $188 billion by the end of 2022, with state and local tax revenue increasing to nearly $44 billion.
“After an extremely difficult two and a half years, things are steadily improving for the hospitality industry and our employees. This progress is a testament to the resilience and hard work of hoteliers and hotel associates who are once again welcoming huge numbers of guests this summer,” AHLA President and CEO Chip Rogers said in written remarks. “While these findings highlight the important role hotels play when it comes to creating jobs, driving investment and generating tax revenue in communities across the country, they also highlight the ongoing challenges posed by one of the tightest labor markets for decades.”
The report also said that hotels are expected to reach 84% of their pre-pandemic occupancy levels by the end of the year. Tam says Indiana closely mirrors the national numbers.
“It’s widely reported that nobody has enough people. Obviously we are no different,” he said. “We’re still trying to bring back a lot of our key people, if you will, who have joined other industries. However, if anyone is looking to enter the hospitality business today, what a great opportunity to advance your career quickly. There are many possibilities, many possibilities everywhere. And we’d love to talk to you.
You can access the full AHLA report by clicking here.