Leisure demand has led the way for the recovery of the hotel industry, which is likely to continue given trends discussed by publicly traded hotel company executives on first quarter earnings calls.

Many companies reported drive-to markets in Florida, California and other Sunbelt states continued to benefit from pent-up leisure demand during the quarter.

Here's what the executives had to say about other demand trends seen during the quarter.

“Importantly, despite limited international travel into Mainland China, we saw robust demand from both leisure and business guests in March. Leisure transient room nights were above pre-pandemic levels for the third quarter in a row. Business transient room nights surpassed pre-pandemic levels in March, up 5% versus March 2019. While group room nights in March still trail the same month in 2019, demand in this segment stepped up significantly after restrictions on large gatherings were lifted mid-month.”
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“For example, when the EU recently announced that they expect to be open to vaccinated U.S. travelers this summer, our reservation centers saw an immediate surge in call volume. In the U.S., occupancy has increased swiftly this year with the acceleration of vaccine rollouts. In March, the U.S. and Canada region had the second highest occupancy behind Greater China at 49%. The domestic rebound is still being primarily led by leisure transient demand.”

“In the U.S. and Canada, reservations at our resort hotels are particularly strong. Booked transient room nights for stays 30 days out or more are now over 60% above 2019 levels. And on top of that, rates are almost 20% higher than 2019 levels. Occupancy on the books for our resorts in the region is higher relative to the same time in 2019 for every month through the end of the year. We believe transient -- business transient and group will continue to slowly improve for now and then business demand could really accelerate in the fall as more businesses reopen with business transient returning faster than group, given the lead time that's generally required for booking group business.”

"Starting in mid-March, we've experienced our highest occupancy levels since the start of a pandemic with system wide occupancy rates exceeding 70% on numerous days. We are optimistic that these demand trends will remain elevated — especially throughout summer — and will further strengthen the financial health of our franchisees."
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"We continue to be optimistic given other positive trends, such as demand increases in key urban locations and our share gains in business travel, combined with the continued resilience of leisure demand. We will continue to evaluate the impact of COVID-19 across the business. And we'll provide further updates in August, during our next earnings call."

"I sort of refer to the pent up demand and the bow wave of return to travel that we're going to see and then the question is going to be what point is the bow wave going to subside into something more normalized. On the positive front, if I look at our group travel for instance, we're already ahead of 2019 levels with our sports segments, and that was in [the first quarter], and the forward bookings for June and July for that segment alone are significantly above where we were in 2019. As we look further into the summer, when you have some of these segments that tend to book more in advance than our transient business, we see some real positive signs."

"With demand strengthening at the onset of the spring break travel season in March and our mix of leisure traveler, we have consistently delivered weekend rate growth. While we are optimistic about this current trend, as well as the continued roll out of the COVID vaccine and easing of restrictions, enabling the opening of attractions and travel, our default posture will be to maintain a tight rein on cost control initiatives until the demand returns closer to pre-pandemic levels."

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"We have continued to experience a market improvement in operating results with strong RevPAR index gains.This relative outperformance is occurring most dramatically in our drive-to destination markets, including those in Florida, California and other Sunbelt states. Leisure travel currently represents over two thirds of our bookings, and weekends are still outperforming weekdays. In addition to leisure, we are seeing some recovery in certain segments of corporate travel related to essential businesses such as construction, transportation and project-related business."

"From a segmentation standpoint, our leisure markets continue to outperform with drive-to markets such as South Florida, Charleston and Orlando benefiting from significant pent-up leisure demand throughout the first quarter, including robust travel trends driven by an extended spring break in March.

"Additionally, there were several markets have benefited from unique catalysts during the quarter, such as the Superbowl in Tampa, the bi-annual legislative year in Austin and inauguration-related demand in Washington, D.C.. With all of our markets benefiting from some incremental leisure demand, our portfolio achieved weekend occupancy of 56.5%, the highest of any quarter since the beginning of the pandemic. In light of the work from anywhere flexibility for many, our brands and product type are allowing us to benefit from an elongated weekend, which now includes Thursdays."

"Our leisure markets, such as Miami, Phoenix and Hawaii, as well as some urban markets, including Washington, D.C., Northern Virginia, Atlanta and Philadelphia outperformed the industry over the first quarter. Our hotel [earnings before interest, taxes, depreciation and amortization] turned positive in March, allowing us to achieve $21 million of positive pro forma hotel EBITDA for the first quarter. First quarter revenues were primarily driven by strong leisure demand for our resorts and hotels in the Sunbelt markets and Hawaii, as well as by special group business in several of our urban hotels. As vaccine deployment accelerated through the first quarter, occupancy in our Sunbelt markets and Hawaii rose from an average of 20% in the first week of January to 57.4% in the last week of March."

On business-transient demand: “We expect continued corporate office reopenings to drive a meaningful pickup in business transient demand toward the back half of the year. Based on what we've seen in China and pockets of the U.S. once restrictions are lifted and offices reopen business travel returns. In the first quarter business transient revenue was roughly 75% of 2019 levels in states that were further along in the reopening process.”

On group demand: “On the group side, forward booking activity continues to improve month-over-month. Group bookings made in the first quarter for the back half of the year were roughly flat with 2019 booking activity suggesting customers are increasingly optimistic about safety measures and loosening pandemic restrictions. Near-term group bookings continue to be driven largely by social events and smaller group meetings. But we are seeing a slow shift back to a more normal mix of business with corporate group lead up more than 70% for future periods. Associations and trade shows have also started opening up housing and registration sites for events later this year further signs of moving forward within person group meetings. As we look out to next year our group position is roughly 85% of peak 2019 levels with rate increases versus 2019. Group bookings were up in the mid teens for 2023 versus 2019.”

On leisure demand: “My expectation is, [we’re] going to have an incredibly robust, leisure driven summer. So we're going to continue to see good progress. We believe the summer will be meaningfully over 2019 peak levels of leisure demand as we get into the fall.”

“Booking trends are bound to normalize over time as we continue to fill out the resorts in future periods. But the good news is we've built up a large enough base to start strategically yielding our business, especially now on the weekends. As we look ahead, we expect robust leisure demand throughout the spring and summer months with hotel occupancies in the 90% range on the weekends.

“Weekdays will increasingly be driven by meetings and conventions, and our group business remains solid in the back half of this year. With more clarity around Nevada's gathering guidelines, we're actively working to secure more in-the-year, for-the-year business and to partially offset the anticipated levels of wash in attendance per group. Our differentiated Convene with Confidence program, designed to safely accommodate events large and small, has received great feedback from our clients. With the larger groups expected to return at scale in '22, our business in '22 and '23 is on pace with pre-COVID levels.”

“Spend at our resorts was also up meaningfully over the comparable period in 2019, resulted in total revenue per occupied room higher by more than 10%. As a reminder, leisure transient portfoliowide has historically accounted for about 40% of our demand, with corporate transient at 35% and group at 25%. Not only do our drive-to resorts benefit from strong leisure, but all of our urban markets have strong leisure components. And markets like San Diego and Los Angeles are benefiting now. Washington, D.C., Boston, Seattle, Portland, San Francisco, Chicago and Philadelphia should also benefit from this summer, assuming the amenities and attractions are open in those markets.”

“This year's recovery is being led by the leisure traveler, who continues to be most of the demand currently traveling. While all segments will increase as the year goes on, leisure travel is a segment that is likely to remain the driving force behind the recovery for the second and third quarters as government restrictions ease, and as more and more people feel safe and comfortable traveling.

“In fact, we've already seen the leisure recovery pick up speed since the beginning of the year when it was at its low point. Not only did occupancy pick up in February and March, but overall bookings consistently increased through the entire first quarter, including for future months. For us, demand consistently increased throughout all of our markets.”

“My experience is that structural demand does not change over time, and we are looking forward to seeing the rates and business we had in 2019”

“Domestic leisure and meetings and events demand for the second half of the year is encouraging”

“Leisure was the star, and DiamondRock's unique focus on experiential drive-to resorts and urban lifestyle hotels has been a source of strength. In the first quarter, leisure revenue increased 31% from the fourth quarter of 2020, driven by a 16% increase in room rates. Looking ahead, we expect similar strong demand patterns to persist this summer.

“Turning to the group segment. We are seeing clear and proven activity and are optimistic that these trends will continue in the second half of 2021. While group room revenue was just 8% of our total room revenues in the quarter, we did see group revenue increase an impressive 65% from the fourth quarter.

“Group booking activity continues to accelerate. In the first quarter, we had 7200 leads representing 1.2 million room nights. This is a 65% increase in leads with a corresponding 71% increase in room nights compared to the fourth quarter. As a point of comparison, lead volumes for DiamondRock are at 61% of pre-pandemic levels and well ahead of the Cvent industry average of 55%. Overall, we are very encouraged that group demand is rebuilding. And as we will discuss later, we believe DiamondRock is uniquely positioned to benefit in 2022.

“Business transient demand is still a small contributor. But like group it is unquestionably moving in the right direction. In the first quarter, our business transient room volume was up 25% sequentially from the fourth quarter. We expect business transient demand will be much stronger by the fourth quarter. But until then improvement will be gradual and likely follow return-to-office plans. There are numerous encouraging data points."

“[Demand is] going to vary a little bit by hotel and by market. But I would tell you that we are seeing increasing occupancy on the weekends in our urban hotels throughout first quarter and it looks like that's continuing in the second quarter. I do think ultimately to drive meaningfully profitability in the back half of the year you are going to need to see some level of [business transient] and group come back in the third and fourth quarter, [which] is really what our expectation is.”

“Consumer confidence is back, hotels are selling out again and our busy summer season is upon us. A period over the next six months where the U.S. Travel Association is reporting that nearly 9 out of every 10 Americans surveyed are planning to take a trip. …

“There's no better proxy for us then what happened in January and February in the [first] quarter with our mid-week rates, and our mid-week occupancies, which outperformed the weekends when there wasn't a lot of leisure demand up there. What was down 20% to prior year in [the fourth quarter], that business segment for us, which is 30% of our occupancy for our hotels, improved to down less than 10% in the first quarter. …

“In terms of the demand that's out there, in terms of the recent optimism in terms of the global anxiety just continuing to fall, and our booking windows lengthening and our average length of stays lengthening … it would suggest to us continued pick-up through the spring and summer months. Then we'll be looking for that continued business travel segment that we continue to see pick up … to continue to help our hotels gain share.”

“Demand for our hotels has been broad-based. Occupancy and [average daily rate] steadily improved during the quarter, resulting in [revenue per available room] of over $68 in March. RevPAR increased 25% from January to February and 27% from February to March and positive trends have continued since the end of the quarter. We estimate the full portfolio occupancy was approximately 68% for the month of April with continued improvement in rate. It is important to note that these results include all of our hotels as we were able to remain open and operational even during periods of lower occupancy.

“Our portfolio of rooms-focused hotels has performed better than the overall industry, as well as our chain scales, as reported by STR, even without a full return of business travel. With business demand expected to meaningfully increase in the back half of the year, we are confident we are well-positioned for continued outperformance.”

“With strong leisure and improving business transient fueled by an accelerated rollout of COVID vaccines, demand improved more quickly than anticipated, especially as we entered spring, resulting in a 65% increase in occupancy from 40% in December to 66% in March.”

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“While we saw meaningful improvement in both weekday and weekend occupancies, weekend occupancy continued to exceed weekday occupancies during the quarter, indicative of the relative strength of leisure demand. Weekday occupancy moved from 42% in January to 62% in March, while weekend occupancy moved from 51% to 80%.”

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“Not surprisingly, a number of our top performing hotels and markets during the quarter were located in warmer parts of the country with strong performance in many of our California, Texas and Florida hotels. … Twenty-seven of our hotels ran occupancies in excess of 80% for the full quarter. Strong performance in these markets was driven by a wide variety of demand generators, including leisure, project business, entertainment, insurance, medical, government, military relocations and a number of other small corporate accounts.”

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“Our suburban hotels continue to outperform urban hotels in the quarter with occupancy of 57% as compared to 49%. We also generally saw weaker performance from our hotels in the Northeast and Northwest and from our hotels located in markets with greater historic exposure to large group and convention. Detroit, Minneapolis, St. Paul, Denver and New Orleans produced lower occupancies as did our hotels located in the Chicago suburbs."

"We started to see elevated levels of leisure demand in February, followed by a pronounced improvement in March driven by spring break in the United States, and the easing of travel restrictions in China. While several weeks do not make a trend, we feel the spring break period in the United States provides a preview of pent up demand for travel, which we anticipate will drive performance through our traditionally heavier leisure period in late quarter two and into quarter three. During the latter half of March, leisure transient room nights for comparable hotels surpassed levels during the same period in 2019. This was primarily driven by our resort locations, but we also experienced improvement in urban and suburban locations, as well. ... While leisure transient trends are encouraging, we are fully aware that group and business transient demand needs to improve meaningfully to reach a full rapid recovery. Despite rooms revenue from these segments being just over 20% of 2019 levels in March. We remain optimistic business transient that has shown steady week over week improvement since January and continues to grow. Conversations with several of our top corporate clients suggests that we will continue to see moderate progress in the near term, with a more pronounced uptick expected in the fall. On the group side, bookings are also headed in the right direction. New group business booked in Q1 for all future periods finished up 55% as compared to Q4 of 2020. Further, we crossed a notable inflection point in April when net group production in the month for the year was approximately $8 million, meaning gross gross revenue booked was in excess of all cancellations and reduced projections for attendees over the remainder of the year. We're also encouraged by the number of group leads we're receiving, which are up materially since January and gaining momentum."

"Business transient demand, showed marginal improvement from last quarter, while group demand began to show signs of recovery with small group bookings in the quarter for the quarter. Lead volumes continue to increase from 50% of 2019 levels in January to 80% of 2019 levels in April. Not surprisingly, our top performing hotels for the quarter are located in leisure destinations with minimal travel restrictions in place. Each of our three hotels in South Florida average occupancy rates over 80% for the quarter on stronger than anticipated leisure demand. In many of these leisure markets. The demand pace has been so promising that our teams have been able to increase rate by yielding out lower rated discounted for more profitable channels."

"We are encouraged by recent increases in demand and booking activity. year over year comparisons with more favorable as occupancy levels exceeded prior year for the first time since the start of the pandemic in March. Particularly should demand and drive to and resort markets has recovered meaningfully with properties like Royal Sonesta San Juan, Sonesta Hilton Head, and Sonesta Fort Lauderdale posting occupancies in excess of 80% in recent weeks. Business transient demand increases are likely to be more gradual, not making a material contribution until 2022 and thereafter. In the near term, at least, group meetings will likely allow for a combination of in person and video attendance with proof of vaccination or negative COVID testing are required for attending. Our suburban extended stay hotels continue to outperform our urban full service and business focused select service hotels, a trend we have seen throughout the pandemic. Our extended stay hotels continue to have a significant significant accuracy premium to non-extended stay hotels with our 165 extended stay hotels reporting occupancies are 54.5% during the quarter, compared with occupancies of 31.2% and 20.7% respectively, for our 94 select service and 51 full service hotels."

Editor's Note: Chris Nassetta serves on CoStar Group's board of directors.