A new study from the American Hotel & Lodging Association says hotel room revenue and state and local tax revenues are projected 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 growing by nearly 12% and hotel room revenue increasing by 15%, the study says.
Patrick Tamm, CEO of the Indiana Restaurant & Lodging Association, said the numbers are ahead of schedule, as many forecasts called for revenues to not return to normal until 2024.
Tamm 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 very proud of,” said Tamm. “The second half of this year for downtown Indianapolis and really our trade show and convention business looks very strong. [It’s] going to be down a little bit from 2019 levels, but frankly, [it] looks very strong. At the same time, though, business travel is significantly down and still remains down.”
In the central business district in Indianapolis, Tamm said business travel is only at 40% of occupancy on a Monday or Tuesday night, even under a best-case scenario. Areas such as Fort Wayne, Evansville and other parts of the state, it could be lower.
The AHLA 2022 Midyear State of the Hotel Industry Report says, nationally, 47% of business travelers have extended a business trip for leisure purposes in the past year, and 82% say they are interested in doing so in the future.
“We see some of that,” Tamm said. “We’ve never been a tremendously strong leisure market from … a business traveler, but some of that is occurring. I’m encouraged by the state and the Indiana Destination Development Corp., their pursuits for [tourism campaign] IN Indiana. We really need to improve our brand as a state, not just for travelers and business decision makers, but for everyone.”
Nationally, the AHLA report projects hotel room revenue to surpass $188 billion by the end of 2022, with state and local tax revenues increasing to nearly $44 billion.
“After a tremendously difficult two and a half years, things are steadily improving for the hotel industry and our employees. This progress is testament to the resilience and hard work of hoteliers and hotel associates, who are welcoming back guests in huge numbers this summer,” AHLA President & CEO Chip Rogers said in written remarks. “While these findings highlight the important role hotels play when it comes to creating jobs, spurring investment and generating tax revenue in communities across the country, they also underscore the lingering challenges posed by one of the tightest labor markets in decades.”
Additionally, the report says hotels are expected to reach 84% of their pre-pandemic employment levels by the end of the year. Tamm says Indiana is very reflective of the national numbers.
“It’s been widely reported that no one has enough [employees]. We’re clearly not different,” he said. “We are still trying to get a lot of our key people back, if you will, that joined other industries. If someone wants to get in a hospitality business today, though, what a great opportunity to rapidly advance your career. There’s a lot of opportunities, a lot of openings across the board. And we would love to talk to you.”