The U.S. hotel industry sold more rooms at higher rates in the week between the Christmas and New Year’s Day holidays than ever before, according to the latest weekly data from CoStar hospitality analytics firm STR.
The record holiday season capped a solid third year of recovery from the COVID-19 pandemic. Higher demand and rates were achieved despite a winter storm that derailed some travel plans and mass flight cancellations by Southwest Airlines, which actually drove higher occupancy for airport hotels in the markets most affected by the disruption.
Though the downturn triggered by the pandemic was the most severe ever, the industry has recovered at a quicker pace. Three years after the start of the pandemic, real revenue per available room — adjusted for inflation — is down just 6%. Three years after the start of the Great Recession, real RevPAR was down 18%.
A recession this year is expected to slow the recovery somewhat.
The recovery so far has been led by demand from leisure travelers, or vacationers, though STR performance data has suggested a pickup in demand from business and group travelers, particularly in the fourth quarter of 2022.
For the week ending Dec. 31, U.S. hotels sold 21 million room nights — beating the record set a year ago for this period of 20.7 million room nights. U.S. hotel occupancy for the week, however, was only the fourth highest of the past 23 years since STR began collecting data. Higher hotel room supply means more rooms to sell, which explains the difference between room demand and occupancy.
U.S. hotel occupancy for the week was 54.2%, down slightly from the 54.3% mark set last year and the record 54.9% set in 2016.
Nominal average daily rate for the week was $167, surpassing the record set a year ago by 4.4%. Nominal RevPAR was up 4.2% year over year to $91, which while not a record high was higher than other weeks when the holidays fell on the same days. Adjusted for inflation, real ADR and RevPAR were both above 2019 levels but slightly trailed 2021.
U.S. hotel occupancy on New Year’s Eve was 63.6%, the highest of the week but well behind the 68.7% recorded in 2016, which was the last time the holiday fell on a Saturday. Room demand for New Year’s Eve was the highest ever recorded, with 3.52 million room nights sold compared to 3.5 million in 2016.
U.S. daily nominal ADR on New Year’s Eve was $199, the highest ever recorded by STR, but adjusted for inflation, daily real ADR was $3 less than a year ago.
By chain scale, luxury hotels reported the strongest weekly occupancy at 59% while midscale hotels had the weakest at 47.6%. Upper-midscale hotels, however, set a record for this particular week with 55.9% occupancy. Luxury hotel occupancy trailed the 62.1% set in 2019.
For New Year’s Eve, luxury hotels also reported the highest occupancy at 76.1%, but that also was lower than the 82.8% set in 2019 and 86.4% in 2016.
Market Performance
Forty markets — including Atlanta, Boston and Chicago — recorded their highest occupancy ever for the last week of 2022. Gatlinburg/Pigeon Forge had the nation’s highest occupancy at 87.6%, followed by the Florida Keys at 86.8% and New York City at 84.3%.
Of the 166 STR-defined markets, 46% had occupancy above 50% for the week, a higher percentage than in 2019 but slightly less than in 2021. More than a quarter of all U.S. markets reported occupancy above 60%. Occupancy during the seven-day holiday period surpassed 80% in 24 submarkets, led by Key West at 90.7%. but also including larger submarkets such as Lake Buena Vista (86.4%), New York Midtown East (85.8%), New York Midtown West/Times Square (85.7%) and Disneyland (82.1%).
Among the 10 largest hotel submarkets with a major Southwest Airlines presence, airport hotels reported 64.9% occupancy for Dec. 26-29, the four days most affected by Southwest flight cancellations. That was the highest on record for that four-day period.
More than 31% of hotels in those submarkets had occupancy above 80% during that period. Denver Airport/East achieved a collective occupancy of 75.1%, which was the highest occupancy that group has ever recorded for those four days. BWI Airport hotels reported record occupancy of 52.8%. Airport hotel occupancy in Phoenix and Nashville were also elevated during that period to 70.9% and 60.1%, respectively, the highest for that four-day period of the past three years.
Occupancy on New Year’s Eve surpassed 70% in 13 of the top 25 markets, led by New York City at 88.3%. Collectively, top 25 market occupancy for New Year’s Eve reached 72.7%, which was below the record high of 80.1% set in 2016.
Ten markets set all-time records for weekly ADR led by Maui, where ADR topped $1,164 — the highest of any market ever. Hawaii/Kauai also set a record for the week with ADR of $714, as did Oahu at $460 and Orlando at $200.
ADR increased by more than 10% year over year in 31 markets, led by Montana where rates were 27.6% higher and followed by New York City, up 26.5%.
Maui had the highest daily nominal ADR on New Year’s Eve at $1,121 — up 3.2% year over year. The Florida Keys, Hawaii/Kauai, Colorado and Miami markets all reported daily nominal ADR above $500.
Most markets reported their highest nominal RevPAR for the comparable week going all the way back to 2000. For a handful of markets — including California North Central, Gatlinburg/Pigeon Forge, Hawaii/Kauai, Maui and Oahu — it was also the highest nominal RevPAR of any week since 2000. Maui had the week’s highest nominal RevPAR at $872. RevPAR was also above 2019 levels in all but three markets — Los Angeles, San Francisco and Fort Myers.
Isaac Collazo is VP Analytics 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.