2021 Predictions (sort of)
Well. It’s been 6 months since my inaugural blog post. So the “I plan on writing once or twice a month” from my last post didn’t workout too well. But I’m going to chalk that up to 2020 being a year of best intentions and worst of outcomes. So we move forward.
I’ll keep my second post to the point with some predictions for the 2021 year. These will focus on the Covid, technology, the economy, and the hospitality industry.
1) Covid-19: US case counts and deaths peak in February and fall off a cliff in Q2. Higher than published case counts due to asymptomatic citizens who have antibodies already, vaccination opportunities, and moving out of “flu/cold” season allowing more outdoor activities. Mask wearing will continue to be the norm for most, but bars/restaurants see relaxed regulations by end of Q2 in red states and Q3 in blue.
2) Technology: Regulation is coming for big technology companies despite “best efforts” to quell bad actors. Silencing or moderating content (Twitter/Facebook and Trump), de-listing/de-activating apps (App store and Shopify to Parler and Trump store fronts respectively) or complete back-end chaos (AWS and Parler) all are significant shifts in policy within these tech companies that is far more dangerous than the Section 230 debate. Whether we like it or not, a handful of businesses have power to silence your voice and potentially your business. On this note, crypto might end up finding its big use case outside of Bitcoin. The need for a truly decentralized private, anonymous, and portable identity is apparent. Bitcoin was created in 2009 and was the first primary use case of a decentralized financial ecosystem. Right, wrong, or indifferent, the value of decentralization and portability is now on full display given these most recent actions by the large tech companies.
So will 2021 be the breakout year of “internet 2.0” or “decentralized web” that we’ve heard so much about? Is there finally another use case for a business built on top of a decentralized protocol like Ether? One of bitcoin’s first utilities was for untraceable transactions on Silk Road, so the parallels are there. Regardless, I’d expect another round of hearings for the tech firms and grandstanding for the politicians.
3) Economy: Most asset classes will continue to be driven up by massive stimulus packages and continued low interest rates. Don’t fight the Fed. These stimulus packages will include massive bailouts of state finances due to the Democrats controlling all 3 branches of government. Biggest question mark here is whether the USD continues to be the most trustworthy store of value as compared to other sovereign currencies like China. The result is most people will have more nominal dollars next year, but our purchasing power will remain flat, and the purchasing power of the dollar will continue to deteriorate throughout the year.
4) Hospitality: Q1 and Q2 will slowly show glimpses of growth in ADR and occupancy. Transient travel returns to 75%+ normalcy by Q4 2021, but with corporate budgets strained in 2021 and a lack of certainty around the business cycle, there are too many room nights available and not enough diverse demand to drive yield. Weekends will be the saving grace as more people look to travel in Q3/Q4, but without the weekday meetings & events crowd combined with slower business travel demand, I don’t see occupancy or RevPar levels getting above 70% as compared to 2019 by year end.
None of these predictions are particularly controversial or unlikely. Biggest question marks in my mind are how the Democrats handle policy while having all three branches, how they handle the big tech firms, and what stimulus is provided to the middle class that has been so damaged over the past 12 months.