U.S. hotel industry occupancy increased 0.4 percentage points compared to last year, reversing the course of year-over-year declines of the previous three weeks.
Weekends delivered the strongest gains, with occupancy up 1 percentage point, followed by weekdays Monday through Wednesday, up 0.6 percentage points. Occupancy on the shoulder days — Sunday and Thursday — was down 0.4 percentage points.
This strong weekend performance was possibly buoyed by early Halloween festivities, given that the actual holiday fell in the following week on Tuesday, a school night. Average daily rate increased 3.9%, the sixth consecutive week above 3%, with weekdays showing the greatest increase, up 4.5%, followed by weekends, up 3.9%, and shoulder days, up 2.8%.
Revenue per available room was up 4.6% versus a year ago, which was the highest growth rate of the past three weeks and among the highest of the past 25 weeks. Over the past six weeks, 60% of the industry’s revenue gain has come from weekdays, with the top 25 markets contributing as much as the remaining 143 markets. This provides further evidence that business travel is recovering on the back of conferences and group meetings.
Weekdays and weekends were solid in the top 25 markets. Compared to last year, occupancy increased 1.3 percentage points on weekends and 1.1 percentage points on weekdays. Shoulders were softer, increasing only 0.4 percentage points. While occupancy was strongest on the weekend, ADR increased the most on weekdays, up 5.4%, resulting in a weekday RevPAR gain of 6.9%. Weekend ADR grew 4%, with RevPAR up 5.8%. Shoulder-day ADR increased 3.3% and netted a RevPAR increase of 3.9%.
In the remainder of the country, performance was subdued with occupancy increasing less than 1 percentage point over the weekend and weekdays while decreasing on shoulder days. ADR was a bit healthier: up 3.7% on the weekend, up 3.4% on weekdays, and up 2% on shoulder days.
Three top 25 markets — New York City, Las Vegas and Boston — continued to report strong performance, with occupancy above 85% for a third consecutive week and double-digit ADR growth. These three markets also posted the highest weekday and weekend occupancies of all top 25 markets. Other markets seeing strong weekday occupancy at or above 80% included San Francisco, Washington, D.C, and Nashville. ADR in these markets also showed strong growth. Austin led the non-top 25 markets as occupancy reached 82.4%.
Group demand among luxury and upper-upscale hotels rose 4.3% year over year, while dipping slightly from the prior week’s post-pandemic high. Since Labor Day, group demand has increased 3.1% year over year on average. Compared to the same post-Labor Day period in 2019, group demand is down 1.5% with occupancy down 1.9 percentage points. Group ADR for the most recent week was $259, increasing 4.5% year over year. After adjusting for inflation, ADR was up 2% versus 2019. As the fall conference season winds down, group meetings and events are well on the road to recovery. The top 25 markets seeing the largest gains in group demand of 5 percentage points or more included San Francisco, Atlanta, St. Louis and Washington, D.C. Among key markets, only Oahu surpassed 2019 group levels over the past seven weeks.
Luxury, upper-upscale and upscale class hotels all experienced strong weekend performance with year-over-year occupancy increases of 3 percentage points or more. Weekend ADR growth was healthy for upscale class hotels, up 4.3%, and more moderate for upper-upscale, up 2.3%, and luxury, up 1.1%. Upscale and upper-upscale hotels posted strong weekday occupancy gains of 3.7% and 3.1%, respectively, with all three upper-tier hotel classes recording weekday ADR increases of 3%. Upper-midscale class hotels generally matched the overall industry increase in occupancy and ADR for both weekends and weekdays. Midscale class hotels were essentially flat, and economy hotels saw falling occupancy across all days of the week with only slight ADR improvement.
Global Performance
Global occupancy, excluding the U.S., remained just above 70% but was down from a week ago. As compared to a year ago, occupancy continued to reflect healthy growth, up 6.4 percentage points. ADR and RevPAR also showed strong year-over-year gains, up 8.9% and 19.9%, respectively.
Occupancy for the top 10 countries, based on total supply, was 72.1%, up 8.9 percentage points year over year. The gain in the top 10 was due almost entirely to China, where occupancy increased 21 percentage points year over year. Without China, occupancy would have been just slightly up. As has been the case for weeks, top 10 ADR and RevPAR showed strong growth year over year, up 9.3% and 24.7%, respectively.
France saw the largest occupancy decrease among the top 10, down 3.5 percentage points year over year to 65.1%. The country held both finals of the Rugby World Cup at the Stade de France. While Paris saw mostly flat occupancy on the match nights — up 0.5 percentage points and 0.2 percentage points — the days leading to those nights showed an average decline of 10.8 percentage points. Lyon and Marseille, having hosted some of the earlier matches also in the finals week, saw overall occupancy fall 4.6 percentage points and 1.8 percentage points, respectively. Despite lower occupancy, ADR in Paris soared to $581 over the weekend, up 47.2% year over year. Overall, ADR in France was up 13% year over year.
Outside of the top 10 the countries, occupancy was led by:
- Americas: El Salvador occupancy was 78.2%, up 19 percentage points year over year.
- Asia-Pacific: Fiji occupancy was 83.7%, up 4.7 percentage points year over year. Fiji also had the highest occupancy of any country.
- Europe: Serbia occupancy was 79.3%, down 5.2 percentage points year over year.
- Middle East & Africa: United Arab Emirates occupancy was 82.3%, up 2.1 percentage points year over year.
Final Thoughts
The U.S. hotel industry performed as expected driven by solid weekday growth, which was likely driven by conventions and group meetings ahead of the Halloween week along with increased business travel. The weekend growth was somewhat of a surprise and better than what it was a year ago, which we attribute to football games and other events. Also surprising this week was the year-over-year fall in year occupancy among key European countries like the U.K. Germany, France and Italy.
Looking Ahead
As we have been writing for the past two weeks, U.S. performance for the week ending Nov. 4 will be weak due to the impact of Halloween, which fell on a Tuesday this year. We expect occupancy to be down about 8 percentage points year over year. The week following Halloween will see a recovery, but it will be short-lived as Thanksgiving and the Christmas holiday season nears. Globally, performance will stay strong, but it, too, will begin to slow.
Isaac Collazo is vice president of analytics at STR. Chris Klauda is senior director of market insights at STR. William Anns is a research 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.