While there is nothing “normal” about this year’s hotel performance levels, the data is showing a return to the normal seasonality that causes hotel occupancy to ebb and flow.
In the latest weekly data from STR, CoStar’s hospitality analytics firm, U.S. hotel industry occupancy dropped to 65.7% in the week ending Aug. 14 — a decline of more than two points from the previous week. On a relative basis, however, the index to 2019 was down only 0.5 points week over week.
The data suggests that the occupancy decline is due mostly to seasonality associated with the reopening of in-person schools across the country.
U.S. hotel occupancy declined for the third straight week, but the index to 2019 has remained relatively flat for the past six weeks, suggesting the return of seasonality.
Rising cases of COVID-19, largely connected to the Delta variant, also likely contributed to the decline in hotel occupancy.
On a total-room-inventory basis, which accounts for temporarily closed hotels, weekly occupancy was 63.3%. Currently, only 1% of U.S. hotel rooms — 64,000 — are closed, and nearly half of those closures are in just three cities: New York, Orlando and San Francisco.
Even with the drop in occupancy, 67% of all U.S. hotels reported occupancy greater than 60%, and of those, a third had occupancy above 80%. At the peak of summer travel, 76% of hotels reported occupancy above 60%, with 43% above 80%.
What is worrisome is the rate of decline for large hotels — with 300 or more rooms — especially in STR’s top 25 markets.
Overall, occupancy at large hotels fell four points to 55%, compared to 68% occupancy for all other hotels.
In the top 25 markets, large hotel occupancy decreased by five points. Large group hotels in the top 25 markets experienced an even larger decline, with weekly occupancy down six points to 52%. In those major markets, 64% of large group hotels reported occupancy below 60% and the remaining 36% posted occupancy above 60%. During the comparable week in 2019, 82% of large group hotels in top 25 markets had occupancy above 60%.
As was reported at the Hotel Data Conference, group hotels accounted for 40% of the industry’s revenue decline in the second quarter, with large group hotels in the top 25 accounting for 28% of the loss.
Weekly hotel demand also declined for the third consecutive week, but the index to 2019 was only 0.1 points lower than in the previous week.
For the week ending Aug. 14, 25 million hotel room nights were sold — an average of 3.6 million rooms each day of the week. At the peak of summer, 3.9 million rooms were sold on average each day.
Hotel rates, which have set all-time records during the summer leisure travel season, dropped for a second straight week.
Average daily rate for the U.S. hotel industry was 1.4% lower than the previous week. Rates declined slightly more on the weekend than on weekdays.
Weekend ADR in the top 25 markets fell 4%, with the worst decline reported by large hotels, where ADR was down 6%. Overall, ADR in the top 25 was down 2.6% week over week, compared to a decline of 0.8% for all other markets combined.
Total industry nominal ADR was 106% of what it was during the same week in 2019 — slightly better than the previous week, when industry ADR was 105% of the 2019 level. Nominal industry ADR has surpassed 2019 levels for the past seven weeks.
On an inflation-adjusted basis, ADR has been at or above 2019 weekly levels in four of the past seven weeks. On a market level, 63% of markets had real ADR above 2019 levels, up from 60% in the previous week.
According to STR’s Market Recovery Monitor — which compares the latest weekly performance data against the comparable week of 2019 — total room inventory RevPAR remained in “recovery,” with RevPAR between 80% and 100% of 2019 levels, for the 10th straight week.
Despite the occupancy decrease, and accounting for inflation, the index rose slightly.
On a 28-day moving average, 58% of U.S. markets had “peak” nominal RevPAR — greater than 100% of 2019 levels. That percentage is the highest so far of the recovery. Leading the index are hotels in the Florida Keys.
Adjusted for inflation, 45% of markets had “peak” RevPAR, which was also the highest percentage to date.
On the flip side, 19 markets remained in “recession,” with RevPAR between 50% and 80% of 2019 levels, or “depression,” with RevPAR less than 50% of 2019 levels. San Francisco continues to have the lowest index, with RevPAR at 41% of 2019 levels.
Isaac Collazo is VP 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.