The number of U.S. hotel rooms sold to groups is up double-digits in the latest weekly performance data, led by Las Vegas, which hosted two large conventions.
U.S. hotel group demand, or groups booking blocks of 10 or more hotel rooms, increased 12% year over year for the week ending Jan. 27. It marked the third consecutive week of year-over-year growth in the metric, which is notable given that U.S. hotels benefited from a favorable post-omicron surge in January 2023. Average daily rate from groups has also increased for the past three weeks.
As has been the case several times over the past couple of months, the Las Vegas market had a significant impact on industry performance. Las Vegas has twice as many rooms as the next largest market in the U.S. and during the week hosted the Shooting, Hunting and Outdoor Trade (SHOT) Show as well as the World of Concrete convention.
Meanwhile, outside of the U.S., global hotel occupancy and revenue per available room continue to rise despite the waning effects of COVID-19 travel restrictions in year-over-year comparisons.
U.S. hotel performance is expected to steadily improve over the next several weeks as business and group travel return, reaching a seasonal peak in mid-March. Super Bowl week is expected to boost performance in the host city Las Vegas and will likely affect U.S. performance. An early Easter will affect March and first-quarter year-over-year comparisons.
Global performance is expected to stabilize, but Chinese New Year, sporting events and Taylor Swift’s international tour will drive the ebb and flow.
US Performance Highlights
The U.S. hotel industry posted big gains for the week with revenue per available room up 4.8% year-over-year. That performance was driven entirely by average daily rate, which increased 5.1% year over year, while occupancy at 56.2% essentially matched the same week last year.
The top 25 largest markets in the U.S. led the gains, with RevPAR up 10.8% year over year thanks in large part to Las Vegas, which alone posted an 88.5% increase in RevPAR.
Excluding Las Vegas, total U.S. hotel RevPAR increased a modest 1.4%, lifted by an ADR increase of 2.8% that was offset by an occupancy decrease of 0.8 percentage points. Top 25 RevPAR, without Las Vegas, increased only 3.7%.
Besides Las Vegas, markets posting group occupancy more than four percentage points above last year were Chicago, Oahu, Tampa, San Francisco and Orlando.
Chicago, the third largest market in terms of room supply, also posted a significant RevPAR increase, up 52.1% year over year — a result of both ADR (+21.2%) and occupancy (+11.5 percentage points). Chicago hosted AHR (Air-Conditioning, Heating, Refrigeration) Expo at McCormick Place Convention Center.
Eleven of the top 25 markets posted RevPAR gains above the industry average while eight markets saw RevPAR go into arrears.
For hotel markets outside of the top 25, RevPAR was down slightly due to falling occupancy, partially offset by a 2.5% ADR increase. Baltimore, which hosted the NFL’s AFC playoff, and the Colorado Area market, benefiting from a good ski week, led with RevPAR growth of more than 16%.
Global Hotel Performance
Outside of the U.S., the strongest occupancy performance within the top 10 countries based on supply came from China, up 12.2 percentage points.
However, RevPAR declined 11.7%, a result of ADR decreasing 27.4% due to the shift in the Chinese New Year. The seven-day public holiday started on Jan. 22 last year; this year, it starts on Feb. 10.
Other high-occupancy markets include Spain, up 6.7 percentage points partially due to Madrid hosting the large annual international tourism fair FITUR. Spain also had the second highest ADR gain, up 16% and resulting in a 29.4% RevPAR gain.
The third highest was Germany with occupancy up 3.4 percentage points and ADR up 12.4%, netting a RevPAR increase of 19.4%. Japan also posted strong RevPAR fueled by an ADR gain of 28.2%. Seven out of the top 10 countries posted positive RevPAR growth for the week.
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.