A holiday calendar shift, college basketball finales and pre-eclipse travel benefited U.S. hotels as March yielded to April.

U.S. hotel performance during the week of March 31 to April 6 was robust, with revenue per available room rising by 6.9% year over year via a 2.9-percentage-point occupancy gain and a 2.1% increase in average daily rate. This week’s strong RevPAR growth came from an easy comparison to last year due to the shift in the Easter observance, which occurred a week later in 2023.

As a result, Friday and Saturday nights over the weekend drove weekly results with 26.1% RevPAR growth. Weekdays Monday through Wednesday and shoulder days Sunday and Thursday were down in aggregate as they began the week with Easter Sunday 2024. Performance improved from Wednesday as the easy Easter 2023 comparisons materialized.

It’s easy to dismiss the week due to the easy Easter comparison. However, offsetting the comparison to the same post-Easter week last year, the U.S. hotel industry held up rather well despite ongoing weakness in the lower segments of the industry.

A year ago, U.S. hotel RevPAR was up 8.6% versus 6.9% this year. The difference was due to lower ADR gains: 2.1% growth this year vs. 4.7% growth in 2023. Occupancy grew faster this week but ended up at nearly the same level as it was a year ago – 64% this year vs. 64.1% a year ago.

Demand growth was higher this year, particularly over the weekend, which can be attributed to travel ahead of the total solar eclipse on Monday, April 8. As a result, this year’s weekend RevPAR growth was higher than last year.

However, travel on weekdays and shoulder days was better last year in the week after Easter than this year due to flat ADR. Last year, ADR growth in those two periods was closer to the rate of inflation.

Hotel group demand bounced back after the Easter week slump, increasing 22.1% week over week and 33.3% year over year. A look at comparable post-Easter weeks in both years shows group demand is 6.1% below last year, which is one of the first times group demand declined this year. Group ADR increased by a healthy 9.6% year over year and by 3.8% when compared to the comparable week in 2023.

Among the top 25 U.S. hotel markets, both Phoenix and Philadelphia grew hotel RevPAR by more than 35% during the week. Phoenix hosted the NCAA Men’s Final Four and Philadelphia hosted WrestleMania 40. And with the easy comparisons, weekend RevPAR was more than 100% higher this year. Adjusting to the same post-Easter week last year, Phoenix was the big winner with RevPAR up 77% over the weekend and 35% in the full week as ADR rose 25%.

Outside the top 25 U.S. hotel markets, Cleveland hosted the NCAA Women’s Final Four and its hotels grew RevPAR by 59.2%. Des Moines, Iowa, hosted several youth sports events and as a result hotel RevPAR in the market jumped 53.1%. Lastly, Indianapolis hotels saw the greatest RevPAR gains at 51.2%. Cleveland and Indianapolis were also in the direct path of the solar eclipse on April 8.

While we don’t typically include U.S. preliminary monthly data in this Weekly Insights analysis, it’s worth noting that the first quarter of 2024 has seen much lower hotel RevPAR growth than anticipated.

We expected the quarter to be somewhat weak given the strong performance from 2023, but the first quarter of 2024 was softer than we like, with 0% RevPAR growth. In particular, March was much weaker than anticipated as illustrated by the preliminary estimates below:

• RevPAR fell 2.2%, the first decrease since February 2021.
• Demand dropped 2.7% and has fallen in 12 of the past 13 months.
• ADR rose just 0.2%, the smallest gain since March 2021.
• RevPAR among hotel chain scale varies from down 0.4% in upper upscale to a significant 7.2% decrease in economy hotels.
• Demand among hotel chain scales shows an 8.3% jump for luxury and a 1.8% increase for upper upscale. All other segments are down from a 1% decrease in upscale hotels to a 6% dip in the economy hotel segment.

Consider that this March had five Sundays versus four last year with the fifth Sunday being Easter Sunday, which is traditionally a very weak Sunday in terms of hotel performance. However, if you look at the month where both years are matched to the month – Friday, March 1 to Friday, March 29 in 2024, compared to Friday, March 3 to Friday, March 31 in 2023 – it’s clear that the month was soft regardless beyond the fifth Sunday. For those 29 days, U.S. hotel RevPAR was down 1.5% all on falling occupancy.

It is likely that lower- to middle-income travelers are being squeezed out of travel due to the continued rise in prices, increased debt and its servicing costs. This has led to the end of pent-up demand, which is not being offset by robust business and international travel. The lower-tier segments are feeling the impact more than the upper tier, which continues to benefit from increased group travel.

The U.S. hotel industry should see better growth in April than in March with tailwinds from Easter 2023 and the solar eclipse along with continued strong group demand. Headwinds include the Passover observance in late April that will slow some group travel along with the lack of an April spring break season due to the early Easter observance. Last year’s Taylor Swift tour from mid-March through August boosted travel along the path of the tour and will be missed this year, resulting in softness in some markets.

Travel for events, concerts, sports and festivals remain a strong demand driver. However, it’s likely that travelers will be more selective than they were a year ago. Summer is still anticipated to be more robust than last year, but U.S. hoteliers will have to wait and see.

Most of the largest global countries saw hotel RevPAR decline as well, which is in line with past years and the Easter holiday. While RevPAR was down in Mexico, its hotels saw the largest occupancy increase with markets in the northern and central parts of the country in the path of the solar eclipse seeing the largest gains. March overall was generally positive; however, the next months will start to reflect more stable patterns as pandemic comparisons are completely gone from all year-over-year comparisons.

Globally, the industry appears to have reached its normalization period. Double-digit RevPAR gains have faded away and will now only appear among special events. Along with the 2024 Paris Olympics, several markets in Europe will benefit from the Taylor Swift effect as her tour starts up next month in France and runs through the summer, ending in London in August.

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.

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