Leisure travelers returned to San Antonio in ’21, but conventions still missing

The average occupancy rate at area hotels was 59.3 percent last year, up from 42.1 percent in 2020 but still below the 66 percent rate notched in 2019, according to STR, a data firm that tracks the hospitality industry.

“The glass is more than half-full,” said Robert Thrailkill, general manager of the Hilton Palacio Del Rio downtown. “We’re certainly not back to where we were in ’18-’19, but we are looking forward now.”

“In ’21 we saw a huge surge in our leisure travelers,” he added. “But what definitely was missing was the other side of our business equation, which is the group side.”

Local hotels generated $1.1 billion in revenue in 2021, up 79 percent from 2020, when many shut their doors for months, but still down 13.5 percent from 2019.

“San Antonio’s hotel market has recovered faster than most others across the state and country,” said Chelsea McCready, senior director of hospitality analytics at CoStar Group, which owns STR. “The only major markets that have recovered faster than San Antonio are beach destinations.”

The city’s rebound comes thanks to vacationers filling hotels on the weekends as demand begins to bounce back for conferences, conventions and bus tours, she said.

Revenue per available room, or RevPAR, a key measure of hotels’ performance that reflects occupancy and average daily rates, averaged $64.98 last year, compared with $74.14 prior to the pandemic. But that doesn’t tell the whole story, McCready said.

Demand for rooms rose as vaccination rates increased in 2021, and RevPAR returned to 2019 levels in the second half of the year. So while occupancy has trailed historical levels since June, “higher than normal room rates have made up the difference,” and RevPAR is expected to reach record levels in 2022, McCready said.

Missing conventions

San Antonio is an attractive destination for residents of Houston, Dallas, Austin and the Rio Grande Valley, said Rusty Wallace, area managing director for Omni Hotels & Resorts, which includes Omni La Mansión del Rio and Mokara Hotel & Spa.

“We’re easy to get to, we’re relatively affordable and we were able to draw that leisure customer back,” he said.

But postponed and canceled conventions are hampering the industry’s recovery.

In 2019, Visit San Antonio, which markets the city to convention planners and travelers, booked 88 meetings with a total of 389,892 attendees at the Convention Center. Five meetings were canceled.

Amid the throes of the pandemic in 2020, 68 meetings were scrapped and 19 went on as planned. Last year, Visit San Antonio drew 55 meetings to the Convention Center, with a total of 195,273 attendees, as nearly the same number, 53, were canceled.

Some of the shelved conventions in 2020 and 2021 have been rescheduled for future years, said Patricia Muzquiz Cantor, executive director of the city’s Convention and Sports Facilities Department.

For 2022, Visit San Antonio has 74 meetings, with a projected total of 321,343 attendees, scheduled at the Convention Center.

“Group demand hasn’t fully recovered in any major markets across the country, but it is recovering at a decent pace in San Antonio,” McCready said.

Downtown hotels reliant on big events have been hit hard by the decline in meeting and business travel. But the outlook is brightening, she added.

“The return of conventions and corporate travel this year will help the downtown/River Walk area, which has consistently trailed other areas of the city in hotel occupancy since the start of the pandemic,” McCready said.

While a return to pre-pandemic conditions nationally is still several years away, the American Hotel & Lodging Association expects occupancy rates and room revenue to get near 2019 levels this year.

Dissecting the rebound

That’s largely because of leisure travelers. Business travelers made up 52.5 percent of room revenue in 2019 but are expected to represent only 43.6 percent in 2022, according to a report by the trade group based on data from Oxford Economics and STR.

“Hotels have faced enormous challenges over the past two years, and we are still a long way from full recovery. The uncertainty about the omicron variant suggests just how difficult it will be to predict travel readiness in 2022, adding to the challenges hotels are already facing,” Chip Rogers, president and CEO of the lodging association, said in a statement. “The slow return of business travel and fewer meetings and events continue to have a significant negative impact.”

Among operators’ challenges is finding employees. When local hotels shut down at the beginning of the pandemic in 2020, thousands of employees were laid off.

Higher pay, better hours and benefits elsewhere — as well as health concerns and opportunities to retire or pursue a career in a different field — led many to leave the sector. Hotels and other hospitality businesses are increasing wages and offering bonuses to attract workers.

Omni Hotels has bumped pay rates by 25 to 30 percent in some cases, and Wallace said its lowest starting rate is about $16 an hour.

“Things have kind of settled down a little bit as far as staffing goes. Some positions are still difficult to find, and those would be positions like housekeepers, culinary especially, cooks,” he said.