Fall hotel bookings for September and October are pacing ahead of last year in the U.S.
Along with steady year-over-year gains in weekly performance, trends in business travel and group demand suggest total U.S. hotel industry occupancy will strengthen to near 70% in the weeks after Labor Day.
The last time U.S. hotel occupancy was 70% or better was the week ending July 29, according to data from STR, CoStar’s hospitality analytics firm. Occupancy was above 70% for three weeks in July and two weeks in June.
Forward bookings data from STR shows that business on the books for September and October is 3.2% higher than it was at this time last year.
The data bodes well for business travel, as the fall travel season is typically dominated by that segment, along with groups and meetings.
Other promising signs on the business travel front include the continued dominance of the biggest U.S. metropolitans — the top 25 largest hotel markets — in the weekly performance data. The greatest gains in occupancy in these traditionally business-driven markets have been on the weekdays, which are a proxy for business travel.
For the week ending Sept. 2, weekday (Monday-Wednesday) occupancy continued to drive performance and showed the largest year-over-year gain of the past nine weeks, up 1.5 percentage points. Weekday occupancy grew by 3 percentage points in the top 25 markets.
Weekdays also produced stronger average daily rate and revenue per available room gains among the top 25 markets, with ADR up 4.5% and RevPAR up 9.7%. Outside of the top 25, ADR increased 2.8% and RevPAR rose 4%.
At 86.2% occupancy, New York City edged out the Alaska market (86%) for the nation’s highest occupancy following Alaska’s four-week run in the top spot. Boston was the only other market breaking the 80% occupancy threshold. Weekday occupancy was also over 80% in those three markets, as well as in San Francisco, which so far has lagged the other big cities in the recovery.
New York City hotels also received a significant weekend boost with occupancy of 93.8%, lifted in part by the White Label World Expo and the start of the U.S. Open.
Of all the top 25 markets, Minneapolis and Las Vegas posted the largest year-over-year RevPAR increases, up 26.7% and 26.3%, respectively. Both markets experienced dramatic year-over-year increases in group business. Additionally, Minneapolis’ growth was led by strong weekend occupancy of 85.5% and a weekend ADR increase of 9.7%, due to the Minnesota State Fair, which is the second largest state fair in the country behind Texas.
Las Vegas reported strong ADR across the entire week, with the metric growing 16.5% on weekdays, 12.8% on the shoulder days and 6.9% on the weekend. Across the three top 25 Florida markets threatened by Hurricane Idalia — Orlando, Miami and Tampa — only Tampa posted significant week-over-week changes in performance. Tampa hotel occupancy dropped 8.4 percentage points from the prior week, producing the market’s lowest occupancy of the year so far at 53.7%. Occupancy also declined significantly in Melbourne and Daytona Beach due to the hurricane.
Higher-end hotels also have dominated performance gains. Over the past four weeks, hotels in the upper-upscale and upscale chain scales increased RevPAR at twice the industry rate, up 4% and 3.9%, respectively.
Group demand among luxury and upper-upscale hotels increased 1.7% compared to the same week last year. Over the past six weeks, group demand has average gains of 2.1% compared to the same six weeks last year.
Global Performance
Following typical seasonal patterns as the summer holidays end in the Northern Hemisphere and school begins, global occupancy excluding the U.S. softened considerably to 64.3%, down 6.6 percentage points week over week. However, occupancy continued to show strong, year-over-year growth, up 4.1 percentage points. ADR increased 12.5% to $144, resulting in a 20.2% gain in RevPAR to $94.
Of the top 10 countries based on supply, the United Kingdom led with 77.9% occupancy, up 2.3 percentage points year over year but down 2.9 percentage points week over week, due to the annual bank holiday. Canada posted the second-highest occupancy at 75.1%, up 2.3 percentage points year over year. Japan, Indonesia and China each posted occupancy gains of more than 7 percentage points and RevPAR gains of 30% or better.
Isaac Collazo is vice president of analytics at STR. Chris Klauda is senior director of market insights 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.