Each year, Memorial Day contributes to U.S. hotel performance declines during the week of the holiday.

But despite the down week – which is normal for the week that contains Memorial Day – there are encouraging trends that U.S. and global hotel performance are normalizing following the pandemic.

The week ending June 3 reflects a turning point in global hotel performance. U.S. and global results are pointing to more normal patterns.

Events will continue to drive market-level performance and all indications are for leisure travel to remain strong. Group demand should show a small burst in June and then slow until fall. Business and corporate demand continues to improve with gains in weekday occupancy. Average daily rate remains positive, although the rate of ADR and revenue per available room growth continues to moderate as forecasted.

During the week of May 28 to June 3, U.S. hotel industry performance declined, which is typical for the week that contains the Memorial Day holiday. Occupancy was 61.6%, down 1.5 percentage points year over year and 5.1 percentage points week over week.

Based on the previous 20 years, occupancy typically reflects a significant drop for this particular week compared to the previous week. In 2019, the week-over-week decline was 6.5 percentage points, while the 20-year average is a 6.9 percentage-point decline.

Last year was unusual with Memorial Day week only dropping 3.3 percentage points week over week, creating a more challenging year-over-year comparison this year. Room demand for this Memorial Day week was the third highest behind last year and 2019.

Memorial Day was the primary driver of the occupancy decline, falling 21.6 percentage points week over week versus 18 percentage points last year. This year’s decrease was better than the 20-year average — which is a 26.3 percentage-point decline — leading us to reaffirm that 2023 is more and more following pre-pandemic patterns.

Weekend occupancy Friday and Saturday night was 73.1%, down 3.4 percentage points from the two days of the previous weekend and 1.7 percentage points lower than a year ago. This year’s fall was only slightly worse than 2019 — when it was down 1.2 percentage points — with absolute occupancy near the 2019 level at 74.6%. While weekend average daily rate was up 1.7%, revenue per available room fell 0.6% year over year.

The weekly ADR of $150 was down 4.2% week over week but up 1.3% year over year. RevPAR declined 1% year over year to $93, driven by the decline in occupancy. Looking at the past four weeks, ADR and RevPAR remain positive compared to last year, up 2.8% and 1.4%, respectively, but below the rate of inflation, which is approximately 5%.

Occupancy in the U.S. top 25 markets was 65.6% and fared better than the rest of the country, declining only 0.4 percentage points year over year compared to a 2 percentage-point decline outside the top 25. Occupancy for the rest of the country was 59.4%. Top 25 ADR increased 1.8% year over year to $174, while all other markets experienced a slightly smaller increase at 0.7% to $136.

Weekday occupancy Tuesday and Wednesday nights for the top 25 markets continued to show signs of recovery, increasing a significant 0.6 percentage points year over year, which is notable for a week when occupancy overall declined and was preceded by a holiday. Markets outside the top 25 saw a sharp fall, down 1.7 percentage points year over year.

Weekend occupancy declined 0.9% percentage points for the top 25 markets to 76.6% and decreased 2.2 percentage points for the non-top 25 markets to 71.2%.

Overall, shoulder occupancy on Sunday and Thursday nights declined the most at 1.8 percentage points on a national basis with the measure falling by 1 percentage points in the top 25 markets and 2.3 percentage points elsewhere.

Seven markets in the top 25 achieved RevPAR increases above 6% year over year, led by Boston — up 18.6% — Washington, D.C. — up 15.2% — and Las Vegas, which rose 14.7%. Other market highlights include:

• New York City’s hotel occupancy was 80.2%, which ranked first among the top 25 for the ninth straight week and led the nation for a sixth consecutive week. ADR in the city increased 2.9% year over year with RevPAR up 9.2% year over year.
• Oahu saw the nation’s second highest occupancy at 76.1%, and RevPAR rose 8.7% year over year.
• Boston grew occupancy 5.8 percentage points year over year to 74%, and with a 5.8% ADR gain, led the nation in RevPAR growth.
• While weekly occupancy declined in Chicago, RevPAR increased 6.9% year over year on robust ADR, which rose 9.3%. Weekend ADR rose 14.6% and drove the weekly gain via the 11th leg of the Taylor Swift Eras Tour. Weekend RevPAR was up 16.5% to $242. Weekend occupancy also topped 90.2%, which was up 1.4 percentage points year over year. An in-depth analysis of the impact of the Taylor Swift tour on hotel performance will appear Monday on www.str.com.

To recap the Memorial Day holiday weekend, occupancy for Friday, Saturday and Sunday reached 72.1%, the fourth highest since reporting began in 2000 and just slightly below the 20-year average at 72.6%. However, that level was well below the average seen between 2013 and 2019, which was 75.6%. The highest occupancy ever recorded for the three-day holiday was 77.1% in 2016.

Excluding U.S. hotels, global hotel occupancy for the week was 65.5%, down 4.8 percentage points week over week due to the spring bank holiday in the U.K. and Europe. However, occupancy was 6.1 percentage points ahead of last year. Weekly ADR grew 12.7% to $147 with RevPAR up 24.2% to $96.

For the top 10 countries by supply, RevPAR was $93, up 22.2%, driven again by occupancy – which increased 7.3 percentage points – along with robust ADR growth of 8.9%. Occupancy continues to be propelled in a large part by Asian markets, where China and Indonesia recently saw year-over-year increases in occupancy of 15.4 percentage points and 13.4 percentage points, respectively. Overall, occupancy in the top 10 reached 66.6%, down from 72.4% a week ago due to the spring bank holiday.

The U.K. had the highest occupancy of the top 10 countries at 81.2%, 5.3 percentage points higher than the next country, which was Italy at 75.9%. ADR for the top 10 was up 8.9% to $139. For Germany, occupancy this year was 62.8% and last year was 71.3%. This difference can be attributed to a calendar shift of the Whit Monday public holiday, which this year was on May 29, and a year ago was on June 6.

Outside of the top 10 countries, three countries posted an occupancy higher than the U.K.: Ireland at 86.1% — which continues to be the world’s highest – Malta at 83.1% and Greece at 82.5%.

Next week should produce a significant improvement in RevPAR growth across the globe as summer gets into full swing in the Northern Hemisphere and June groups return. Data from Forward STAR shows continued year-over-year growth for the top U.S. markets during the next 90 days. These markets will also drive most of the performance measures, based on the recently updated STR forecast for the remainder of the year.

Chris Klauda is senior director of market insights at STR. William Anns is an analyst at STR. Isaac Collazo is vice president of 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.