Weekly U.S. hotel occupancy continues to fall short of last year’s levels amid changes in travel patterns — shifting from resorts to top 25 markets and international outbound.
The occupancy challenges likely are not a result of increased economic uncertainty as air travel, based on TSA screenings, was up by nearly 10% year over year and has been up since April on a seven-day moving average basis.
Hotel average daily rate growth in the U.S. is also slowing, but that is likely a result of changes in demand from pure leisure to a more normal mix of business transient, group and leisure.
Outside of the U.S., the hotel industry’s pandemic recovery remained in full swing.
U.S. occupancy is expected to increase again this week, heading to its annual apex, which should occur this year in the week ending July 22. ADR growth is likely to remain somewhat muted as the demand mix normalizes. As a result, revenue per available room is anticipated to be flat to slightly down compared to last year. Global performance, excluding the U.S., is expected to show healthy growth over the next several weeks.
US Performance
U.S. hotel performance bounced back from its Memorial Day holiday lull with occupancy of 69.4%, up 7.8 percentage points from the previous week but down 1.1 percentage points from the same week in 2022. Compared to the same week in 2019, occupancy is down 3.2 percentage points — a gap that has widened from an average decline of 1.9 percentage points earlier this year.
For a seventh consecutive week, New York City posted the nation’s highest weekly occupancy at 87.7%. Note, hotels open strictly for housing immigrants have been excluded from all performance calculations.
Eight markets reported occupancy above 80%, including Boston and Seattle. Washington, D.C., was just under that level with occupancy rising by more than 4.5 percentage points year over year.
The largest weekly occupancy gain was in Oahu, where occupancy increased 9.7 percentage points year over year to 84.8%.
As has been the case for most of this year, Friday and Saturday accounted for most of the loss in occupancy — down 2.5 percentage points year over year. However, for the most recent week, Sunday and Thursday also showed a noticeable drop.
Weekend occupancy was down in 71% of all markets, with eight markets reporting declines of more than 10 percentage points.
In the top 25 markets, weekend occupancy dropped 3.1 points. The largest declines were in Minneapolis and Atlanta, down by 11 and 10.6 percentage points, respectively. Outside of the top 25 markets, weekend occupancy was down 2.2 percentage points.
At 69.7%, weekday (Monday-Wednesday) occupancy was basically flat compared to last year and at its highest level of the year so far. Top 25 weekday occupancy reached 74.6% with Boston and New York above 90%. Five other markets — including Denver, Seattle and Washington, D.C. — reported weekday occupancy above 80%. Weekday occupancy in Boston and Washington, D.C. was at its highest point since prior to the pandemic.
Weekday occupancy in central business districts reached 77.7%, but the gap to 2019 remained significant as weekday occupancy then was 87%.
Weekday occupancy outside the top 25 was 67.1%, also flat compared to last year.
As expected, group demand among luxury and upper-upscale hotels returned and reached its highest level of the past six weeks. The largest year-over-year gain in group demand was in Oahu. Nashville, New York City, Philadelphia and Washington, D.C., hotels also posted solid gains in group demand.
Weekly luxury and upper-upscale occupancy jumped above 70%, but the highest occupancy among the chain scales was upscale at 76%. Midscale and economy hotels continued to post declining occupancy, with the latter falling by more than 3 percentage points year over year.
For a second consecutive week, RevPAR fell year over year, this time by 1.2%, as ADR growth of 0.5% was insufficient to offset the occupancy decline. Shoulder and weekend days accounted for the largest RevPAR decreases, down 1.4% and 4.3%, respectively, while the measure was up 1.6% on weekdays driven by ADR growth of 1.7%. Adjusting for inflation, weekly real RevPAR was down 5.5% year over year and has fallen for the past five weeks. Real ADR was also down 3.9%, and has also been declining for five consecutive weeks.
Top 25 RevPAR fell 2.4% year over year, with real RevPAR down 6.6%. This was only the second time that nominal RevPAR has fallen since the recovery began. Both declines have occurred this year.
Outside of the top 25 markets, RevPAR was down 0.3% year over year. Real RevPAR decreased 4.7% year over year.
Global Performance
Global occupancy, excluding the U.S., was 68.5% — the fourth highest level since March 2020 and up 6.5 percentage points year over year. Weekly ADR was up 16.6% year over year to $152, the second highest nominal level since the start of the pandemic. With strong growth in both occupancy and ADR, RevPAR achieved an all-time high of $104, up 28.9% year over year.
Occupancy in the top 10 countries, based on total supply, achieved 70.3%, up 8.6 percentage points year over year. Asia remained a strong contributor to the occupancy gains with China up 16.3 percentage points year over year, followed by a 7.8-percentage point gain in Japan and Indonesia, up 6.6 percentage points.
The United Kingdom again had the highest occupancy among the top 10 countries at 80.8%.
Occupancy in France gained 5.5 percentage points to 79.5%, benefiting from the spring bank holiday and summer travel.
Top 10 ADR gained 12.8% year over year to $143. Japan had the highest ADR gain, up 81.2%, with China, Indonesia, and Germany posting growth of more than 20% year over year.
RevPAR in the top 10 increased 28.5% to $100. RevPAR in Japan was up 104.5% year over year, with China’s increasing by 66.1%. Mexico was the only country in the top 10 to post a RevPAR decrease, down 8.9%.
Isaac Collazo is vice president of analytics at STR. William Anns is an analyst 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.