U.S. hotel performance continues to rely on weekdays and group demand, and that trend continued in the second week of June.
During the week of June 9-15, U.S. hotel revenue per available room paused, posting a small 0.3% increase year over year. The small RevPAR increase was driven by a 0.9% lift in average daily rate offset by a 0.4-percentage-point decrease in occupancy.
The top 25 U.S. hotel markets were fully responsible for the weekly growth; without them, U.S. hotel RevPAR was down 0.9%. Weekdays from Monday to Wednesday in the top 25 markets saved the day, which saw RevPAR increase 5.5% year over year. These markets have boosted the overall industry for the past six weeks. Like the overall industry ADR, weekday ADR was the main driver at 3.4%. The remainder of the markets also saw RevPAR increase by 2.8% during the weekdays but it was insufficient to take RevPAR positive for the entire week.
In contrast, weekend RevPAR on Friday and Saturday for declined 3.9% in the top 25 markets and fell by 5.6% in all other markets. Weekend RevPAR has been negative for over half of all weekends since last year. The shoulder days of Sunday and Thursday saw 2.1% RevPAR growth for the top 25 markets but was flat elsewhere (-0.1%).
Total U.S. occupancy reached 70.3%, which was the highest of the year so far but well below what was seen in the same week of 2019, when occupancy reached 73.5%.
The top 25 U.S. markets producing the strongest RevPAR growth were San Francisco (+30.3%), Houston (+18.1%) and Boston (+11.8%) with weekdays driving the hotel performance for the week. RevPAR was on the rise in seventeen of the Top 25 Markets, but only seven markets saw the measure grow in all day categories with weekend RevPAR the highest in Denver (+21.1%), Detroit (+9.4%), and Chicago (+6.5%).
Over the next two weeks, we expect hotel performance to see gains in occupancy and a leveling out of ADR. The week of July Fourth – the holiday is on a Thursday this year – is expected to see a drop in ADR with a more dramatic decrease in occupancy. Note, AAA is expecting record road trips and the TSA also expect record travel during that time. The two weeks post July Fourth should see a week-over-week increase in occupancy with occupancy reaching its apex in the week ending July 20.
Weekdays Produced the Best Performance Across All Chain Scales
Compared to the same week last year, chain-scale RevPAR for the week ending June 15 generally followed the bifurcated patterns seen over the past six months with the strongest performance at the top end and weakest performance at the bottom.
Upper-upscale and upscale hotels posted the only RevPAR gains. Upper-upscale RevPAR increased 2.6% year over year, which was a combination of increased ADR and occupancy. Upscale hotels grew RevPAR by 1.2%, which was driven by a 0.9% ADR increase.
Luxury took a back step this week as RevPAR dipped 0.7% year over year, the result of a 3.1% ADR decline while occupancy increased 2.4%. This segment’s ADR has been down in 20 of 24 weeks of this year. This is most likely due to a mix shift on weekdays and changing travel patterns as outbound travel remains elevated.
RevPAR in upper-midscale hotels dropped 0.4% due to an occupancy decline, which offset a 0.4% ADR increase.
Midscale RevPAR also declined mostly due to occupancy declines while economy hotel RevPAR was affected by both occupancy and ADR declines.
Weekday RevPAR was higher than overall weekly RevPAR for all chain scales and in positive territory for each, except in the economy segment, which declined 1%.
Lifted by Weekdays, Hotel Group Demand Continues To Improve
Luxury and Upscale hotel group demand increased 3.2% compared to the same week last year. Once again, weekdays produced the strongest demand gains – up 5.9%. Shoulder days Sunday and Thursday rose 1.9% while weekends declined 1.6%. Group ADR grew 2.4% year over year, which is the smallest increase seen in the past seven weeks, a possible indication that group pricing power is slowing as summer begins in earnest. Group ADR followed the day-of-week pattern for demand with weekdays up 3.2%, shoulder days up 2.7% and weekends flat at 0.3%.
While group demand has been strong this year, the year-to-date figure remains 6.5% below what it was in 2019. The largest deficits are group nights on shoulder days and on the weekend, which is 8% or more below 2019. Weekday has a deficit but it’s half of what it is on the other day categories.
Global Hotel Performance Begins To Slow
Global occupancy is starting to slow with occupancy down 2 percentage points year over year this week and essentially flat over the past four weeks. ADR continued to grow, increasing 8.4% year over year this week and 6.5% over the past four weeks. RevPAR for the week increased 5.4% year over year and has risen every week since March 2021.
Among the largest countries in terms of room supply, Japan, Spain, and Indonesia posted the strongest year-over-year RevPAR gains, which were affected almost entirely by ADR. Additionally, Taylor Swift’s Eras Tour helped lift RevPAR in Liverpool up 43.8% year over year and Edinburgh up 29.5%. The tour continues in the United Kingdom with stops in Cardiff, London, and Dublin.
France and China saw the largest RevPAR decreases of the largest countries, down by more than 11% each this week. The latter is likely due to the Dragon Boat Festival.
Cities throughout Europe this summer will benefit from the Eras Tour with the above-mentioned cities plus Amsterdam, Zurich, Milan, three cities in Germany, Warsaw, and Vienna hosting the tour. Additionally, most key European cities will also benefit from increased travel by Americans. In May, outbound travel from the U.S. was up 11% overall.
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.