There are no signs that the forward momentum of the U.S. hotel industry recovery is being slowed by travel hassles or economic concerns as demand for hotel rooms reached a three-year high in the latest weekly results.
Despite high gas prices and airfares, TSA airport screenings on June 26 reached the highest seven-day average since March 2020, and U.S. hotel occupancy for the week ending June 25 was 72.3% — the highest level since August 2019.
That momentum is expected to continue in July, with CoStar hospitality analytics firm STR predicting the U.S. hotel industry to continue to set pandemic-era records in demand, occupancy, average daily rate and revenue per available room.
Occupancy increased for a third straight week, up 0.5 percentage points from the previous week and up 2.6 percentage points versus a year ago.
U.S. hotels sold 28.2 million rooms during the week. Room demand has been above 28 million for the past two weeks. In all of 2019, demand surpassed that level seven times, but the most recent week’s result was still 1.3% below the comparable week in 2019.
Nominal average daily rate gained 1.1% week over week to $157, which was the second highest value since weekly reporting began — behind only the week of New Year’s 2022 ($159). Nominal ADR was 17% higher than in the comparable week of 2019 and 17% — or $23 — higher than a year ago.
Nominal revenue per available room reached a 22-year high of $114 — 12% higher than the matching week of 2019 and up 21% from 2021.
Not only was the week’s demand the best of the pandemic era, it was also the 15th highest for any week since 2000. Of the 25 highest demand records, two have occurred this year and over the past two weeks.
The highest weekly demand ever recorded occurred in the week ending July 20, 2019, when 29.6 million rooms were sold. Furthermore, for weeks that have ended in the month of June, this week’s result was the fifth highest since STR began benchmarking weekly performance.
The growth in demand was led by upscale and upper-midscale hotels. Both chain scales reported the highest weekly room demand of the past 22 years, topping the record that each set a week prior.
Twenty-two markets — including Nashville, Portland and Seattle — set pandemic-era demand records. Sixteen others — including Chicago, Dallas, Denver, New York City and San Diego — reported their second highest demand since March 2020. Five markets — mostly smaller like Allentown/Reading, Pennsylvania, and Greenville/Spartanburg, South Carolina — reported their highest weekly demand going back to 2000. Nashville was the large market to appear in that group with its highest weekly demand since STR began benchmarking weekly levels. In the comparable week of 2000, Nashville demand was 155,000, whereas for this week in late June 2022, room nights sold topped 315,000 and drove occupancy of 81%. Orlando sold the most rooms this week overall at 765,000, its fifth highest volume since the start of the pandemic. More striking, Orlando’s demand was the highest ever recorded for a week ending in the month of June.
Market occupancy was again led by Alaska at 90%, its third week in the top spot. The state was followed by Portland, Maine, at 89%, Omaha at 87% and New York City at 87%. Of the 10 largest markets in the country, based on supply and excluding Las Vegas, New York City had the highest occupancy, followed by Orlando (80%) and Chicago (76%). Overall, 59% of the 166 STR-defined markets reported weekly occupancy above 70%, which was the most since the start of the pandemic. Occupancy above 80% was achieved in 12% of U.S. markets.
Occupancy in the top 25 markets was down slightly from the previous week to 75%, but that percentage was still the second highest level of the pandemic era. In the comparable week of 2019, top 25 market occupancy stood at 80%, while a year ago it was 67%. Demand in the top 25 markets, however, was the third highest ever recorded for this particular week, with the highest such level occurring in 2019. The top 25 was led by New York City, and all but seven of the markets reported occupancy above 70%. Houston posted the lowest occupancy of the group at 59%, but that was slightly higher than a year ago.
Occupancy in central business districts dropped for a third consecutive week to 74% — the third highest level since the start of the pandemic with the high mark occurring three weeks ago. Of the 20 central business district submarkets, the New York City Financial District had the highest occupancy at 89% followed by Seattle and San Diego at 85%, and Nashville at 83%.
Weekday occupancy (Monday-Wednesday) was 71%, down slightly from a week ago. Excluding Monday, the two-day average reached 74% and was the highest since the start of the pandemic. Weekend (Friday and Saturday) occupancy was 81%, a pandemic-era high and the third highest since March 2002. By day, Wednesday and Thursday occupancy was the highest it has been since March 2020 at 75% and 74%, respectively. Top 25 markets and central business districts set pandemic-era highs in occupancy Wednesday through Friday.
Nominal ADR for the week was at the second highest level ever recorded. On an inflation-adjusted basis, real ADR was the 15th highest since 2000 and second highest since the start of the pandemic. Fifteen markets reported their highest real ADR since the start of the pandemic, including Denver, San Diego and Seattle. Twenty-two markets set real ADR records for June, including Tampa at $144 and Orlando at $132.
In each of the past three weeks, nominal RevPAR hit pandemic-era highs, increasing from $110 to $114. The previous record of $107 was established in the week ending July 28, 2018. Real RevPAR also reached a pandemic-era high of $99 and has topped itself in each of the past three weeks. While weekly real RevPAR was the highest of the current era, it ranked 37th going back to 2000 with the record surpassing $109 in the week ending July 23, 2016.
On a market level and adjusted for inflation, 95 markets had “peak” RevPAR, surpassing 2019 levels, including Austin, Dallas, New Orleans and San Diego. Over the past four weeks, 67 markets were at “peak” real RevPAR, including Austin, Miami, Orlando, Phoenix and San Diego. Eighty-eight markets are still in the “recovery” category, with real RevPAR between 80% and 100% of 2019 levels. Only 11 markets remain in “depression,” with real RevPAR between 50% and 80% of 2019.
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.