The U.S. hotel industry reported solid performance during the week ending Dec. 7, lifted entirely by the second half of the week.
Coming off the Thanksgiving weekend, the first three days of the week produced negative year-over-year revenue per available room comparisons. On the flip side, the last three days of the week produced significant RevPAR gains.
Sunday RevPAR was down by double-digits, while Monday and Tuesday decreased at a lesser pace. By Wednesday, RevPAR improved, and the following three days produced double-digit gains. This was not unexpected as the same pattern occurred in 2019, which followed a similar calendar. It’s also likely the compressed period between Thanksgiving and Christmas this year is helping to fuel U.S. hotel performance.
Overall, U.S. hotel RevPAR increased 4.3% with average daily rate entirely responsible for the growth, up 3.8%. Occupancy barely moved, up 0.3 percentage points compared to the same week last year. RevPAR on Sunday through Tuesday declined 7.1% on falling occupancy – which declined by 3.3 percentage points – and ADR, which dipped 1.2%. Wednesday improved, with RevPAR up 7.9%, lifted by 6.1% ADR growth. However, Thursday through Saturday ruled the week as RevPAR increased 12.8% on nearly equal gains in ADR and occupancy. This pattern played out across all markets.
Eight of the top 25 U.S. hotel markets posted double-digit RevPAR gains, boosted by events and football games, both college conference championships and the NFL. Chicago posted the largest RevPAR gain at 42.9%, propelled by the calendar shift of the Radiological Society of North America (RSNA) conference from a week earlier in 2023. Las Vegas saw RevPAR grow 36.7% due to the Amazon Web Services conference and the start of the Rodeo Convention and Cowboy Christmas.
Hotels in St. Louis (+20.2%), Philadelphia (+17.1%) and Seattle (+15.5%) all recorded strong RevPAR gains, starting Wednesday and flowing into the weekend due to strong event calendars as well as football. Minneapolis (+15.3%) and Detroit (+15.2%) rounded out the double-digit hotel RevPAR growth list with strong weekends boosted by football and events.
Tampa also saw positive hotel RevPAR gains all week (+28.2%) driven by the continuing Hurricane Milton recovery efforts. Storm recovery also lifted hotel performance in six other markets, including Augusta, Georgia; Columbia, South Carolina; Florida Central South; Greenville/Spartanburg, South Carolina; North Carolina West and Sarasota, Florida.
For the past six weeks, New York City has led the nation in hotel occupancy, and this past week was no exception (89.9%). The city also led the nation in absolute RevPAR ($457), up 6.7%, eclipsing Miami – the next highest RevPAR market – by nearly $200 even though South Beach was hosting Art Basel. The week’s RevPAR in New York was the second highest of the year – behind the week ending Sept. 28 – when it reached $487 during the United Nations General Assembly.
All chain scales improved following the cold start and hot finish for the week
For only the eighth time this year, RevPAR increased for all hotel chain scales. Like in the previous week, economy hotels led in RevPAR, posting growth every day of the week, partially a result of the Hurricane Helene and Hurricane Milton recovery efforts, which have a much greater impact on hotels in the lower classes. Even without the seven hurricane markets, economy hotels still saw positive weekly RevPAR growth.
ADR dominated the gains for all chain scales with low to no occupancy gains for all segments except economy. Once the Thanksgiving lull of the first three days passed, the last four days of the week produced a return to the bifurcated patterns seen for much of the year with mid-teen RevPAR gains in luxury and upper upscale – the top two chain scales – while gains for the rest of the chain scales hovered around a healthy 10%.
Group demand is unstoppable after the Thanksgiving lull
Group demand among luxury and upper-upscale hotels grew 0.7%, which is notable given the weakness during the first three days of the week. Compared to 2019 which followed a similar calendar, group demand was just 75,000 rooms shy of 2019 levels. For the last four days of the week from Wednesday to Saturday, group demand rose 17.9% compared to last year, reflecting the continuation of strong group demand seen for most of the year. Group ADR for the week increased 6.2%. Of the top 25 U.S. hotel markets that saw double-digit RevPAR gains, all but Tampa saw significant group occupancy increases.
Transient demand declined 1.3% while ADR grew 5.6% and both had the same pattern as group but at more muted levels. The last four days for transient business was positive with demand up 1.5% and ADR up 8.3%.
It’s the holiday season
December is off to a strong start as expected due to the compressed period between Thanksgiving and Christmas. AAA projects a record number of holiday travelers to close out 2024. However, our holiday forecast calls for modest growth due to the movement of Christmas and New Years to Wednesday from Monday a year ago. We were wrong with our Thanksgiving forecast and we would be happy to be wrong again.
Looking further ahead, occupancy on the books in January is net positive based on STR’s ForwardSTAR data. February is flat and March is showing strength benefitting from Easter and Passover observances occurring in April next year.
Global hotel performance highlights
Excluding the U.S., global hotel RevPAR increased 9.1% and has been holding close to this level for the past nine weeks, which is above the year-to-date RevPAR level of 6.8%. ADR continued to be the primary driver, advancing 7.6% this week while occupancy increased less than one percentage point to 67.1%.
Japan continued to post robust RevPAR, increasing 26.6% entirely on ADR growth (26.7%) with Kyoto (RevPAR up 62.4%) and Tokyo (RevPAR up 43.1%) posting the largest gains. All but two of the eleven Japanese markets recorded double-digit hotel RevPAR growth.
Canada took second place with RevPAR rising 24%, lifted by the final concerts of Taylor Swift’s Eras Tour in Vancouver. Vancouver hotel RevPAR increased 145.1% with ADR rising 125.2% to US$350. Weekend ADR increased 283.7% to US$625. The market will also see a solid gain the following week given that the final concert of the entire tour was on Sunday, Dec. 8.
RevPAR in Mexico rose 17.3% on the heels of last week’s 41.8% increase. All but three of the twelve markets saw double-digit RevPAR growth, led by Yucatan/Campeche (42%) and followed by Baja California (37.6%).
France’s hotels followed with a healthy 16.8% RevPAR increase with the Paris market posting a 21.5% RevPAR increase lifted by the reopening of Notre Dame Cathedral.
China posted a modest RevPAR decline this week of 1.7% due mostly to falling ADR. Six of the of the 10 largest markets – which is based on hotel supply and accounts for almost half of the available hotel rooms – saw RevPAR growth, with RevPAR up 9.5% in Shanghai.
Looking ahead, global hotel performance seems unstoppable and is expected to continue growing RevPAR through ADR for the foreseeable future.
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.