The latest weekly hotel performance data shows business travel demand continuing to strengthen in the U.S. as occupancy topped 70%, driven in part by high demand for hotel room nights on weekdays and in big-city markets.
Data from CoStar hospitality analytics firm STR for the week ending Sept. 24 shows U.S. hotel occupancy at an eight-week high, while weekday hotel demand (Monday to Wednesday) was the highest its been since the summer.
Weekday occupancy in the top 25 largest U.S. hotel markets reached 75.7%, the second-best since the start of the pandemic and the highest non-summer level.
Weekday performance from the total industry and top 25 are indicative of business travel recovering.
Hotel pricing power also remains strong in the U.S., as average daily rate for the week increased 1.4% from the previous week to $158. Compared to the same week in 2020, ADR is up 17.6%.
As a result, weekly revenue per available room improved to $111, a 2.1% week-over-week gain and 30.3% increase from a year ago.
On an inflation-adjusted basis, real ADR exceeded 2019 levels for a second consecutive week whereas RevPAR was just below the pre-pandemic value.
Room demand — the number of room nights sold — was higher than it was in the comparable week of 2019 for a second consecutive week.
In the previous week, the week-over-week demand gain came almost entirely from weekdays. This time, Sunday accounted for 71% of the increase in demand for the week, with 67% of U.S. hotel markets reporting higher demand on Sunday.
Despite reaching a eight-week high, weekday demand for hotel rooms was up only 0.1% from the previous week, with gains on Monday and slight decreases Tuesday and Wednesday.
The U.S. hotel industry’s 61 largest markets, based on hotel supply, accounted for 70% of the week’s demand gains. Orlando alone accounted for 26% of increase.
Other markets with significant weekly demand gains included Charlotte, Dallas, New York and Washington, D.C.
Among the top 25 markets, New York; Phoenix; Washington, D.C.; and Anaheim, California, also reported higher demand for hotel room nights on the weekdays.
New York — which hosted the United Nations General Assembly — and San Francisco, with Salesforce’s Dreamforce conference, both had weekday occupancy of more than 93%. The latter was the largest group event in San Francisco since the start of the pandemic.
Weekday hotel occupancy was at or above 70% in 17 of the top 25 markets, and greater than 80% in nine of the markets.
After reaching a pandemic-era high of 79.1% the previous week, weekday occupancy in central business districts fell to 78.6%. The New York Financial District and central business districts in Seattle and Washington, D.C., had occupancy above 90%, with all but five of the 20 central business districts above 70% occupancy.
Group demand across all hotel chain scales was a significant driver of performance again this week, accounting for 32% of the week-over-week growth in total demand. Additionally, group business accounted for nearly all of the growth in weekday demand as transient declined week over week.
Contract business also added a bit to the gain in weekly demand.
At luxury and upper-upscale hotels, which specifically cater to large group events, weekday group demand was the highest since the start of the pandemic and ranked 20th of all time.
By market, group demand increased the most in San Francisco, New York and Dallas. Chicago and Boston reported significant week-over-week declines in group demand, but both markets retained solid occupancy for the week at 81% and 71%, respectively.
With group business being a major driver of demand growth, it’s not surprising that upper-upscale hotels had the highest weekday occupancy of any chain scale at 79.4%, followed by upscale at 78.2%. Weekday occupancy surpassed 73% in upper-midscale, the largest branded chain scale. For the full week, four of the seven chain scales (luxury, upper-upscale, upscale and upper-midscale) had occupancy above 70%. The remaining three were in the 60% range with economy the lowest at 62.3%.
Demand growth was also solid for the weekend, which accounted for about a quarter of the total demand increase for the week. Occupancy on the Friday and Saturday night rose to 77.3%.
Weekend occupancy was above 70% for 80% of all U.S. hotel markets, and above 80% for a third of all markets. Weekend occupancy has been above 2019 levels in six of the past eight weeks and in 22 of the 39 weeks of the year so far.
The week’s ADR growth was led by San Francisco, where it increased by 37% week over week.
Thirteen of the 166 STR-defined markets — including Charlotte, Oakland and New York — reported ADR growth of 10% or more week over week.
In New York and San Francisco, several submarkets had significant ADR increases associated with the large-scale events held in both cities. ADR was up more than 53%, surpassing $400, in the San Francisco Market St. submarket. In the New York Midtown East submarket, ADR was up 43% week over week to $655. With a nominal ADR of $689, up 24% week over week, the New York Uptown submarket had the nation’s highest level for the week.
Adjusted for inflation, ADR in all but four of the 15 submarkets in New York and San Francisco advanced to a pandemic-era high.
With strong growth in New York and San Francisco, top 25 weekly ADR increased by 3.8% week over week and 29% year over year. Real ADR for the top 25 markets was at 98% of 2019 levels for the week. Weekly top 25 real ADR has only surpassed 2019 levels four times this year. On the weekdays, top 25 weekday ADR increased by 7.4% week over week, led by New York and San Francisco.
College football propelled weekend ADR in many submarkets, including Athens, Georgia; Norman, Oklahoma; Lansing, Michigan; Lubbock, Texas; and Tallahassee, Florida, where ADR increased by 50% or more week over week with nominal weekend ADR above $225. Overall weekend ADR for the total U.S. decreased 1.9% to $167. Real weekend ADR fell to $144 but remained above 2019, as it has since spring.
Nominal U.S. weekly RevPAR rose 2.1% week over week to $111, surpassing 2019 levels as it has for most of this year. Real RevPAR remained just under 2019 levels, but the gap lessened.
Among markets, 90% had nominal RevPAR above 2019 levels for the week, but only 54% of markets were above 2019 levels when considering inflation.
Top 25 markets with weekly real RevPAR above 2019 included Atlanta, Orlando, Phoenix and San Diego. Overall, weekly real RevPAR reached 94% of 2019 levels in the top 25 markets.
Over the past 28 days, 49% of markets had real RevPAR above 2019 levels, an improvement from the previous week. Real RevPAR surpassed 2019 levels in eight of the top 25 markets over the past 28 days, and was at 91% of 2019 levels in the top 25 overall. Weekday top 25 real RevPAR was at 81% 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.