San Antonio hotel business is rebounding, but still not back to pre-pandemic 2019 levels

The average occupancy rate during the first three months of this year was 60.6 percent, according to STR, a data firm that tracks the hospitality industry.

That was up from 49.9 during the same period in 2021 and 54 percent in 2020 — but still below 66.4 percent during 2019’s first quarter.

“San Antonio’s hotels continue to recover from the effects of the pandemic,” said Daryl Cronk, director of hospitality analytics, south, at CoStar Group.

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Daytrippers and vacationers so far are driving the industry’s rebound, and spring break travelers provided a welcome boost in March.

The average daily rate at hotels reached $144.60 in March alone, the highest monthly rate ever. The month’s occupancy rate was 72.6 percent, the highest since last summer.

“Leisure travel related to spring break was the primary demand driver,” Cronk said. “But it was encouraging to see that both weekday occupancy and group occupancy in March reached their highest levels of the pandemic, suggesting the recovery in business travel is gaining momentum.”

Hotel operators generated $321.7 million in revenue in the first quarter, up from $187.5 million a year earlier and $253.9 million two years ago but still lagging $335.6 million three years ago.

In March, unemployment in San Antonio’s leisure and hospitality industry — which employs as much as 13 percent of the city’s workforce — fell for the first time since February 2021.

While there were 600 fewer employees in March, the sector had nearly rebounded from lows in spring 2020, at the start of the pandemic.

The spread of the omicron variant slowed business in January at Hotel Valencia downtown, but February and March were “amazing months,” said Stacy Seaborn, director of sales and marketing.

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“If omicron hadn’t happened, January, February and March would have been just a banner quarter,” she said.

Leisure and business travelers both are returning, though there isn’t quite as much pent-up demand as there had been, Seaborn said. Convention business is still lagging.

While COVID-19 is having less impact, staffing and getting flight routes back at San Antonio International Airport are continuing challenges.

“We’re going to continue to be a tier two city until we start getting more direct flights from major cities,” Seaborn said.

Cronk said the coming months could be busy.

“Leisure travel continues to perform well, business travel is improving and international travel has been slowly rebounding since the U.S. border restrictions were eased last November,” he said.

Business travelers and convention attendees have been slower to return than leisure visitors. As of early March, Visit San Antonio, which markets the city to convention planners, had 327 meetings booked for 2022 with an estimated 460,664 attendees.

That’s far less than the 526 events with 574,842 attendees the organization scheduled in 2019, but an increase from 231 events with 242,979 attendees in 2021 and 160 events with 183,971 attendees in 2020.

Statewide, the hospitality industry is projected to end the year down about $1.2 billion in business travel revenue, 18.1 percent below 2019 levels, according to a report from the American Hotel & Lodging Association.

Still, it’s not among the 10 states expected to end the year with the largest percentage declines. That list includes Wyoming, the District of Columbia, New York and Massachusetts.

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“While dwindling COVID-19 case counts and relaxed CDC guidelines are providing a sense of optimism for reigniting travel, this report underscores how tough it will be for many hotels and hotel employees to recover from years of lost revenue,” said Chip Rogers, president and CEO of the industry trade group.

In San Antonio, the pipeline of hotels in the works is increasing. About 1,432 hotel rooms are expected to be built this year, the highest number to be added in one year in the past decade.

The Bricton Group and Gettys Group Cos. of Chicago recently reopened a former Holiday Inn at 77 N.E. Loop 410 as a Marriott hotel after extensive renovations.

Another company, Merrillville, Ind.,-based White Lodging, recently resumed plans to overhaul the Marriott Plaza hotel across from Hemisfair downtown.

After renovations that will include upgrading guest and meeting rooms and adding a restaurant and bar, the 251-room hotel is anticipated to reopen in 2023 as The Otis Hotel San Antonio.

“Starting this significant project reinforces the confidence we have in San Antonio as a destination, and the hospitality industry’s recovery,” said Jean-Luc Barone, CEO of hospitality management, in a statement.

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