U.S. hotel revenue per available room swung back positive in the end of February and rose 3.1%, following the rollercoaster pattern seen since the start of the year.
One difference in the week of Feb. 23 to March 1 was that average daily rate was the only driver, advancing 2.7% while occupancy was basically flat, down 0.2 percentage points. The previous four “up” weeks for the U.S. hotel industry were the result of both ADR and occupancy gains.
Weekdays Monday to Wednesday showed the strongest growth, driven by 3.3% ADR growth with a small assist from occupancy, which rose just 0.6 percentage points. Shoulder days Sunday and Thursday and the weekend days Friday and Saturday followed with exclusively ADR-driven RevPAR gains of 2.4% and 2.1%, respectively.
Recovery from the Los Angeles wildfires as well as Hurricane Helene and Hurricane Milton are three factors that have been contributing to both ADR and occupancy gains, but their impact is starting to diminish. In the case of Los Angeles, the impact is becoming limited to a few submarkets.
Like in the previous week, most of the Los Angeles wildfire impact was centered in three hotel submarkets – Pasadena/Glendale/Burbank, L.A. North and L.A. East – which have seen elevated demand since the devasting fires began and continue to see elevated performance as RevPAR jumped 20.9%. The remainder of hotels in the greater Los Angeles market saw RevPAR grow a modest 1.9%, partially affected by the calendar shift of the LA Art show in downtown Los Angeles. The Hollywood/Beverly Hills submarket, which had seen negative RevPAR comps since the fires started, posted a second week of double-digit RevPAR growth, up 11.9%.
The 13 Southeast U.S. hotel markets still recovering from the fall 2024 hurricanes saw RevPAR rise 12.3% following a modest 5.1% gain the previous week. Some of the strength in these markets came from activity unrelated to hurricane recovery, particularly in larger markets such as Tampa and Charlotte. However, the impact of recovery efforts remains, and over the past 23 weeks, RevPAR has shown double-digit growth in all but two weeks.
Mardi Gras and the start of spring moved top 25 markets
New Orleans hotels earned the top spot this week with RevPAR increasing 30.6%, lifted by the final celebrations of Mardi Gras ahead of Fat Tuesday on March 4. In 2024, Mardi Gras took place on Feb. 13. Tampa followed with RevPAR growth of 19%, the result of ADR gaining 9.5% and occupancy rising 3.3 percentage points, boosted in part by the start of Major League Baseball’s spring training season.
Something of a surprise was Las Vegas hotels posting a fifth consecutive week of RevPAR declines. Two weeks of those declines were due to the significant boost the market saw from hosting the Super Bowl last year. Conferences and other event calendar shifts are also driving this slowdown. That said, Las Vegas hotels posted the week’s fourth highest occupancy (82%) and ADR ($235) across all of the top 25 U.S. hotel markets.
Tampa, Miami, and Phoenix held the top three occupancy positions heading into the peak spring travel season. For similar reasons, Miami, Oahu and Phoenix landed the top three ADR spots among the top 25.
Group demand shows modest gains and Vegas impact
Group demand in luxury and upper-upscale hotels increased a modest 1.3%, while ADR rose 4.2%. The top 25 markets posted a negative group demand comp – down 1.2% – and felt the impact of Las Vegas. Excluding Las Vegas, group demand increased 2%. The impact reversed for ADR with the top 25 markets increasing 4.3% overall. Excluding Las Vegas, group ADR increased 3.9%.
Luxury hotels continue to lead
RevPAR for luxury chain hotels increased 10.7%, which was the largest gain across all the chains scales for the seventh consecutive week. All scales saw RevPAR growth, ranging from up 3.9% in upper upscale to up 1% in economy hotels. This continued the bifurcated growth pattern seen since last year. ADR drove the RevPAR increases across all chain scales. Only in luxury did occupancy play a significant role, up 2.4 percentage points.
The other hotel chain-scale segments saw minimal occupancy changes ranging from up 0.5 percentage points in upper upscale to down 0.3 percentage points in economy. The lingering impact of Hurricane Helene and Hurricane Milton continued to drive performance in the lower three tiers. Excluding the 13 hurricane markets, RevPAR change in economy hotels dropped 1.4% after coming in up 1% the week prior; midscale hotel RevPAR declined 0.3% from up 1.5% a week earlier; and upper midscale moved to up 1.1% this week from 2.1% growth last week.
Negative demand movement in some US border markets
Recent rhetoric around tariffs against Canada could likely affect travel flows from Canada to the United States. In the nine submarkets along the Canadian border, hotel room demand declines over the past 28 days ending March 1 have been the sharpest in:
- Bellingham/Northwest, Washington (-11%).
- Niagara Falls, New York (-7.6%).
- North Dakota Area (-6.6%).
- Glacier Country, Montana (5.9%).
The other five markets sat within a demand range of down 2.9% in Detroit/Dearborn, Michigan – the largest urban market on the border – to up 0.6% in Maine North & Bangor, Maine.
In 12 submarkets along the southern border, three have seen consistent negative demand for the past four weeks with an average decline of 8.9% in Brownsville, Texas, a 6.2% decrease in McAllen, Texas and a 4.8% dip in Texas South Area. A deeper dive will be provided next week examining all border cities to Mexico.
It’s finally spring, almost
Spring is just around the corner and spring breaks are starting. It begins in earnest the following week when more than half of all U.S. college students will be on break, according to STR’s School Break Report. This is expected to lift hotel demand in spring break markets.
March group demand performance will likely be stronger than last year given that Easter and Passover overlap in April this year. Other items that we are following include the impact of the new administration’s policies on cross-border travel. Also, a tough comparable will be in play in April due last year’s total solar eclipse. The comps for that week are expected to be negative for the U.S. overall, and particularly in markets that were in the path to totality.
Leap Day 2024 note
Leap Day, which fell on a Thursday last year, was included in weekly comparison to last year. It will not be noticeable in monthly year-over-year reporting as it will be “grossed down” into a 28-day month to allow like-for-like comparisons versus previous years.
Fashion week affected hotel market performance in Italy and France
Excluding the U.S., global hotel occupancy slowed to 64.3%, down 1 percentage points while ADR rose 3.4%. China had a role in the decline, but it wasn’t the sole contributor. Excluding China, global occupancy fell 1.6 percentage points, while ADR rose 5.6%.
Across the 10 largest countries based on hotel supply, RevPAR was up by double digits in Italy, Japan and Mexico. Italy received a boost from strong hotel performance in Milan, which held its annual Fashion Week a week later this year. Conversely, France’s negative performance was the result of the calendar shift of Paris Fashion Week. Japan and Mexico both experienced strong performances, mostly driven by ADR growth, which is partly due to foreign exchange rates.
Hotels in Indonesia felt the impact the Ramadan observance slowing travel from Muslim countries. Spain’s negative performance this week was a result of a calendar shift of the annual Mobile World Congress, which is a week later than last year. Germany, in particular, Dusseldorf and Frankfurt, posted significant declines this week, most likely the result of an event calendar change.
Globally, the U.K. and Europe are also expected to benefit in March from the Easter/Passover shift to April. In the Middle East, the monthlong Ramadan observance will slow travel across the region.
Finally, it’s been a minute since we mentioned Taylor Swift. The impact of her 2024 tour across APAC and Europe will provide challenging comps for host markets throughout 2025 starting with Singapore.
Isaac Collazo is senior director 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.