August is off to a strong start for the U.S. hotel industry after a lackluster July.

Guests are squeezing the last drops out of summer as U.S. hotel room demand strengthened year over year for the past four weeks. Occupancy has increased in three out of the past four weeks, softened by a small supply increase. ADR continued to rise, resulting in RevPAR gains for the past four weeks but at a rate below the level of inflation. The top 25 markets are primarily responsible for the RevPAR lift — a pattern seen for most of the year — while the remaining markets have been flat to down. Also driving performance this week was strong summer group demand, which is typically slow during the summer season.

U.S. hotel RevPAR increased for the fourth week in a row, up 1.9% year over year due to ADR increasing 1.4% and occupancy, which rose 0.4 percentage points. Although it increased, RevPAR remained below the rate of inflation. The top 25 markets drove RevPAR’s 4.9% increase as occupancy rose 2% and ADR increased 2.1%. This was offset by flat (-0.1%) RevPAR across the rest of the country. The top 25 markets saw strong performance Tuesday through Saturday with the largest increases on Wednesday (8%), Thursday (11.3%), and Friday (7.8%).

All chain scales, except luxury hotels, posted RevPAR growth this week, including economy hotels (0.9%). This was the economy segment’s first weekly increase since April and only the third time it has grown since May 2023. All branded chain scales recorded occupancy increases while ADR growth was the primary driver of RevPAR in upper upscale through midscale. Upper upscale saw the largest RevPAR gain (4.6%), a result of rising occupancy and ADR. Upscale through Midscale followed with RevPAR gains between 1.3% and 2.1%. Luxury’s 0.6% RevPAR decline was entirely due to ADR.

Eight of the top 25 U.S. hotel markets reported double-digit RevPAR growth. Houston’s hotels led the way with RevPAR up 47.2% year over year. Chicago, Saint Louis, Denver and New Orleans each saw RevPAR growth exceed 20%. Seattle, Boston and New York hotels also posted RevPAR growth in the double digits.

The Houston market has posted double-digit RevPAR growth in 13 of the past 14 weeks with this week’s results the highest level yet. Strong group demand from conferences and sporting events along with earlier impacts from Hurricane Beryl drove hotel performance in the market. This growth was seen across 9 out of 11 of Houston’s submarkets.

Group demand in luxury and upscale hotels has increased for the past four weeks, producing an average increase of 6.9% year over year. This week’s group demand was up 7.6% and ADR advanced 3.4%. As with the industry overall, the top 25 markets were responsible as group demand was up 14.4% while ADR increased a modest 1.6%. Across the other markets, demand was more moderate but ADR grew a robust 5.8%.

Ten of the top 25 markets experienced hotel group demand gains of more than 20%, including Atlanta; Chicago; Denver; Las Vegas; New Orleans; New York; Oahu; Orange Country, California; Saint Louis; and Seattle.

Transient performance across luxury and upper upscale hotels softened with demand down 0.4% and ADR up 1.4% year over year. Across the top 25 markets, ADR rose 2.6% while demand fell 1.2%.

This summer’s solid group performance will continue to wane as typical this time of year before ramping up in September; by that time it will be clear whether the seemingly unending strength of group demand will continue. Group ADR is softening, which is encouraging for event planners but not for hoteliers. Business transient will also increase in September and the strong weekday performance seen all summer serves as a good indication that business travel will continue.

Week two of the Olympics provided France with another world record in hotel performance. Paris RevPAR increased 195.9% following last week’s record 207.2% growth. Occupancy increased 16.9 percentage points with ADR up 137.8%. Friday night earned the highest RevPAR of the week at $735, while Sunday saw the largest RevPAR increase of 224.7%. The Olympic impact extended to the surrounding Île-de-France region, which saw RevPAR grow 169.1% year over year, lifted primarily by ADR although occupancy also increased.

Performance in China has been slowing over the past year with the last four weeks seeing year-over-year decreases in both occupancy and ADR, with the latter mostly responsible for the continuing RevPAR decrease. This decline has been seen across most of China’s sub-markets. Of the top 10 largest sub-markets, all but Shenzhen posted negative performance over the past four weeks. Economic challenges across the country as well as potential “revenge travel” fatigue are probable contributors to this weak performance. RevPAR declined 8.4% this week, which was better than the 11% decline seen in the prior two weeks.

Occupancy across the globe is slowing year over year and may have hit its yearly peak, which tends to occur a couple weeks after the U.S. due to later school start dates outside the U.S.

Global performance will start to see a seasonal slowing as summer comes to an end. France, and Paris in particular, may see an uptick in travel with tourists and business travelers, who avoided the area during the Olympics, returning. All indications are that China will continue to see soft performance. For the rest of the world, performance is expected to slow. However, July 2024 international travel statistics continue to show a lopsided balance with more Americans traveling internationally than their international counterparts visiting the U.S. and we expect this trend will continue into the fall season.

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.

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