Travel stalled the week of March 2-8 with multiple factors at play.
It was a mostly flat first full week of March for U.S. hotels with revenue per available room up a modest 0.6%, the result of a 2.1% increase in average daily rate being offset by an occupancy decline of 0.9 percentage points.
The week started strong with RevPAR growth above 3% year over year on Sunday through Tuesday. Then began the decline, which worsened each day into Saturday, which fell 4%. Strong ADR gains lifted the start of the week and falling occupancy deflated the end.
One possible headwind to year-over-year growth is the calendar. Lent began on the same Wednesday in 2019, and we saw a similar softness in occupancy. Since 2000, Lent has occurred in week 10 three other times, with end-of-week softness seen two other times. It’s also likely that a later spring break contributed to the lackluster performance. According to STR’s School Break Report, about 10% fewer college and K-12 students were on spring break this past weekend versus last year. Furthermore, a review of TSA airport data revealed a second consecutive weekly decrease, with screenings falling 1.8% after a 0.7% decline in the prior week.
The top 25 U.S. hotel markets saw the largest swings in performance.
- New Orleans, lifted by Mardi Gras, delivered double-digit RevPAR gains Sunday through Tuesday and a double-digit decline on Saturday.
- Hotels in Nashville, Los Angeles, and Denver followed with positive double-digit RevPAR starts to the week and negative double-digit ends. In total, 17 of the Top 25 Markets posted Sunday gains, while 19 saw Saturday declines.
- Two standout hotel markets were Chicago and Anaheim (Orange County). Both saw double-digit RevPAR growth during the week via conventions. Orange County hosted the annual Natural Products Expo West one week earlier this year and saw RevPAR advance by more than 70% Tuesday through Thursday.
Across the rest of the country, RevPAR was flat on Sunday and hovered around 1% growth Monday through Wednesday. RevPAR on Thursday and Friday was up by about 2%. Saturday followed the top 25 market pattern with most markets seeing negative RevPAR changes.
Luxury hotels on top for the eighth consecutive week
Across the hotel chain scales, ADR was up and occupancy was down. Luxury earned the top spot for the eighth consecutive week with a 4% RevPAR gain, all on ADR (+4.9%) as occupancy fell. Upper-upscale hotels followed at a more muted pace with RevPAR up 1.3%, also on ADR.
Somewhat surprising was the RevPAR decline in the middle two tiers, entirely the result of decreased occupancy as upscale RevPAR fell 1.1% and upper midscale RevPAR dipped 0.7%. RevPAR was positive in the lower two tiers as midscale rose 0.7% and economy increased 1.4%, driven by identical ADR gains (+1.7%) while occupancy declined. As has been reported for the past several months, the markets affected by hurricanes in the fall of 2024 lifted the lower tiers. Excluding those markets, RevPAR was negative for both scales.
Group demand slowed
Group demand in luxury and upper-upscale hotels decreased 1.2%, while ADR rose 5.2%. A more dramatic decline occurred in 2019 when group demand dropped 6%. As mentioned earlier, the start of Lent may have contributed to the modest group performance in 2025 like in 2019. Transient demand was essentially flat, down 0.2% this year, while in 2019 it was up 0.2%.
The top 25 markets saw the largest group decrease, down 5.6% with declines in 15 of the top 25 markets. The next 25 largest markets posted flat group demand while group demand across the rest of the country increased 1.9%. On the transient side, demand was up 1.1% in the top 25 markets, down 0.6% in the next 25 largest markets and up 2.3% in the remaining markets.
Inconclusive evidence that tariffs are affecting US border markets
A deeper dive into hotel performance along the Canadian and Mexico border produced inconclusive evidence that tariffs were positively or negatively affecting travel flows. There are many factors at play affecting travel, as previously mentioned, which makes it difficult to draw firm conclusions at this stage. The data revealed the following:
- Of the 1,306 hotels within 50 miles of the Canadian border, demand over the 28 days ending March 8 was down 2.2%, while in the past week it was down 0.9%. Demand across the U.S. was flat over the past 28 days and down 0.8% for the most recent week.
- Of the 916 hotels within 50 miles of the Mexican border, demand over the past 28 days was down 0.2%, while over the past week, it fell 4%. The fact that this past week was the start of Lent was a more likely reason for the soft demand on the Mexican border.
LA fires and Southeast US hurricane impact slowly receding
Most of the Los Angeles wildfire impact continued to be centered in three hotel submarkets – Pasadena/Glendale/Burbank, Los Angeles North and Los Angeles East – which have seen elevated demand since the fires. While RevPAR rose 10.9%, it is down from the +20% levels seen over the past eight weeks. The remainder of the greater Los Angeles market saw RevPAR grow 6.9%, with a significant impact from Natural Products Expo West in Orange County.
Across the 13 hurricane markets, RevPAR increased 6.1% this week. While significantly higher than the rest of the country, it is showing a steady decline as compared to the most recent four-week average (10.1%) to the previous four weeks (14.8%) and to the peak period in mid-December when the average RevPAR gain over four weeks was 34%.
Peak spring travel season nears
March Madness is just beginning across the U.S., which will benefit host cities and depress comparisons for last year’s host cities that don’t have that duty again in 2025. Spring break travel will also be seen in results over the next several weeks. STR’s Forward STAR data is showing both positive and negative weeks ahead due to March/April holiday shifts. May and June are currently looking flat. Spring and summer brings festival season with South By Southwest starting March 7 in Austin, leading the way.
We are still uncertain as to the degree of impact the reductions in the federal government will have on travel. Several major airlines have reduced their forecasts due to increased economic uncertainty in falling consumer confidence. However, outbound U.S. travel in February was still up. The Easter shift will mitigate some of March weakness, but April will see a significant hit due to Easter and a tough comparison due to last year’s Total Solar Eclipse.
Global slowdown
Excluding the U.S., global hotel occupancy, slowed to 61.2% – down 4.8 percentage points – while ADR rose 7.3%, netting a decline in RevPAR of 0.5%. Day-of-week patterns showed occupancy falling by more than 5 percentage points Tuesday through Thursday then by a lessor amount in the remaining days. ADR was up across all days.
Across the 10 largest countries, based on supply, RevPAR was up by double-digits in Spain, Mexico, Japan, and India. Spain was lifted by the annual Mobile World Congress held in Barcelona March 3-6, 2025, where ADR soared by more than 100%. The nearby Tarragona/Girona/Lleida Province market also benefited. Last year the MWC was held a week earlier which magnified the year-over-year impact.
Japan and Mexico continue to see strong performance, driven entirely by ADR that is somewhat influenced by currency exchange rates.
India also produced strong performance ahead of Holi, the Hindu Spring festival.
Indonesia was impacted by the Ramadan observance slowing travel from Muslim countries.
Similar to last week, Germany, in particular, Düsseldorf and Frankfurt, posted significant declines. Cologne was also negatively impacted this week, most likely the result of event calendar changes.
Looking ahead, we are also seeing some slowdown on occupancy while ADR continued to make significant gains, buoyed in many countries by currency exchange rates and inflation rates. Americans continuing to travel international certainly provides a tailwind for the global hotel industry.
Isaac Collazo is senior director of analytics at STR. Chris Klauda is senior director of market insights 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.