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The hotel industry this year will surpass pre-pandemic levels of demand and room revenue but struggle with lingering pandemic-era staff shortages, according to annual projections released Monday.

Total revenue per available room will increase from $170.35 billion in 2019 to $197.48 billion this year, the American Hotel and Lodging Association reported.

And room demand is expected to increase from 1.29 billion occupied room nights in 2019 to 1.3 billion this year, according to the trade group’s 2023 State of the Hotel Industry Report.

Record travel last summer has accelerated the industry’s recovery from COVID-19, said AHLA President and CEO Chip Rogers.

“Three years after the unprecedented hardships our industry faced due to the pandemic, hotels continue to make significant strides toward recovery,” Mr. Rogers said in a statement.

Other areas of recovery continue to lag, according to the report.

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The AHLA predicts average hotel occupancy will reach 63.8% this year, two percentage points short of the 65.9% rate in 2019. And hotels are projected to employ 2.09 million workers this year, down from 2.35% in 2019.

In 2020, COVID-19 quarantines drove U.S. hotel revenues to a record-low $85.5 billion in revenues, a 50% drop from 2019.

Past AHLA projections found the industry $59 billion below 2019 revenue levels in 2021 and $20 billion short last year.

The industry has struggled to replace frontline hospitality and food service workers who did not return from furloughs during COVID quarantines. Some hotels “hired” robots and installed automated kiosks last year to replace human housekeepers and servers who switched to work-from-home careers.

Things have since improved to the point that “we are not hearing from guests or hoteliers anymore about hiccups at check-in or housekeeping,” said Yannis Moati, CEO of the New York City-based online booking agency Hotels By Day.

“It’s much better now, but not as good and smooth as 2019 was,” Mr. Moati told The Washington Times.

A tight labor market could limit the hotel industry’s expected recovery this year, added Sean Higgins, an analyst at the libertarian Competitive Enterprise Institute.

“It will have to service those guests while employing about 260,000 fewer hotel workers than it did in 2019,” Mr. Higgins said in an email. “Without the workers, the quality of service suffers and guests will notice that.”

Higher wages designed to attract more workers also add to costs and force hotels to charge higher rates, he added.

“Short of hiking wages, it is hard to see how the industry gets them back,” Mr. Higgins said. “It’s a classic ‘damned-if-you-do, damned-if-you-don’t’ scenario for the industry.”

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