As spring travel season is gearing up for much of the world, hotel performance is back on a growth track.
Sunshine and optimism are coming from strong group demand for hotels and positive trends in forward bookings. An early spring break for the U.S. also bodes well, and record-breaking hotel metrics continue to track closely along with Taylor Swift’s Eras Tour as it navigates international markets.
US Hotel Performance
The latest weekly data from CoStar shows a return to year-over-year growth in U.S. hotel industry revenue per available room, following a decline the prior week.
For the week ending March 2, occupancy held somewhat steady, average daily rate increased, weekday performance grew and group demand exploded, surpassing both 2023 and 2019 levels.
At 62.5%, occupancy dropped a fraction while reaching the highest level of 2024 so far, up 0.5 percentage points from the prior week. Following a decline the previous week, ADR increased 2.7% year over year, boosting RevPAR by 2.3%.
Weekday occupancy was up 1.4 percentage points compared to the same week in 2023, and ADR rose 6.5%, yielding RevPAR growth of 8.9%.
The top 25 markets drove much of that performance with weekday RevPAR up 9.5%, lifted equally by ADR and occupancy. Weekday performance across the rest of the country was driven by an ADR gain of 2.7%, while occupancy declined slightly.
The weekend (Friday and Saturday) took the biggest hit with RevPAR down more than 4% for both the top 25 markets and the rest of the country. The shoulder days (Sunday and Thursday) also showed a RevPAR decline, down 0.6% in the top 25 markets and 1.3% in the remaining markets.
Among the top 25 markets, Las Vegas again took top honors with RevPAR up 36.5%, a result of an ADR gain of 25.4% and an occupancy lift of 7.1 percentage points — all driven by the International Builders Show. Last year, the event was a month earlier.
Four other markets — Seattle, Oahu, Houston and Dallas — posted double-digit RevPAR gains due to varied events. San Francisco also saw strong RevPAR growth, up 9.1% via improvement in occupancy. Across the next 25 largest markets, Baltimore and San Jose/Santa Cruz experienced double-digit RevPAR gains, up 23.8% and 11.6%, respectively.
Group demand among luxury and upper-upscale hotels grew for the ninth straight week, increasing 9.1% year over year and surpassing the 2019 comparable by 1.9%. Group ADR also continued to grow, holding above 5% year over year for the fourth consecutive week. Almost all of the group demand growth occurred in the top 25 markets, where group occupancy was up 2.7 percentage points. Elsewhere, group occupancy was up 0.3 percentage points. Nine of the top 25 markets exceeded the average: Oahu, Las Vegas, Houston, Dallas, Seattle, Orlando, San Francisco, Miami and Nashville.
RevPAR increased in the luxury, upper-upscale and upscale classes, lifted by both ADR and occupancy. The continued strength of group demand is a significant tailwind for many hotels and mostly for those in the luxury and upper-upscale classes.
Midscale and economy hotel performance continues to be soft, due in part to a lack of group meeting facilities as well as a significant number of properties closing or moving out of the segments.
Global Hotel Performance
Analysis of hotel performance elsewhere in the world shows eight of the top 10 countries according to hotel supply posted positive occupancy gains, and ADR grew year over year in six of them.
Indonesia posted the largest occupancy gain, up 11.1 percentage points to 72.1%. ADR also increased 11.3% year over year. Occupancy in the capital, Jakarta, was up 8.6 percentage points to 78.7%, and leisure destination Bali grew occupancy 6.5 percentage points to 67.4%.
Spain posted the highest actual occupancy among the top countries, up 4.7 percentage points year over year to 75%. Occupancy throughout Spain was led by leisure markets. Additionally, Barcelona hosted the Mobile World Congress, an event that drew more than 100,000 visitors over a four-day period. Spain’s ADR grew 8.2%, with Barcelona driving a large portion of the increase, up 13.4% to $379.
China experienced another slow week, post-Chinese New Year, with year-over-year declines in both occupancy and ADR. Year-over-year growth has obviously softened now that the country is beyond the early-2023 comparables that were influenced by reopening.
Isaac Collazo is vice president of analytics at STR. Chris Klauda is senior director of market insights at STR. William Anns is a research analyst at STR.
This article represents an interpretation of data collected by CoStar's hospitality analytics firm, STR. Please feel free to contact an editor with any questions or concerns. For more analysis of STR data, visit the data insights blog on STR.com.