As the spring travel season approaches, U.S. hotel occupancy is blossoming week over week even as rate growth slows.
For the week ending Feb. 24, occupancy was 62%, the highest weekly occupancy of the year so far and up 2.8 percentage points from the prior week.
Like last year, the week included Presidents Day on Monday, which tends to slow travel. But compared to the same week in 2023, occupancy is down 2.1 percentage points. Year over year, weekly occupancy has been down every week of the year so far.
More than half of the loss in demand is coming from economy-class hotels. Occupancy has also dipped year over year in the upper-midscale segment, which accounts for a quarter of the gross demand loss by the industry.
Average daily rate growth stalled, increasing a scant 0.3% year over year following two exceptional weeks due to the Las Vegas Super Bowl.
As a result of the weaker ADR and occupancy comparisons, revenue per available room dropped 3% year over year, which is the second decrease this year and the largest so far.
Group demand for luxury and upper-upscale hotel rooms increased for a seventh consecutive week, up 1.8% compared to the same week last year. The year-over-year gains in group demand, however, have slowed over the past eight weeks. The growth pace over the next several weeks will provide good insight on the strength of group demand.
Group ADR for the week was up 4.9% year over year and is not slowing: up 5.1% on average over the past seven weeks.
US Market Performance
The top 25 markets were not immune to this week’s slowdown. Compared to the same week last year, occupancy decreased 2.1 percentage points and ADR was flat, which resulted in RevPAR decreasing 2.7%.
The weekend (Friday and Saturday) was a bright spot for the top 25 markets as occupancy was down only 1.3 percentage points from last year and ADR grew 1.1%. As a result, weekend RevPAR was down only 0.7% compared to a 2.7% decline on the weekdays (Monday to Wednesday) and a 5% decline on the shoulder days (Sunday and Thursday).
Hotel markets in the rest of the country experienced a similar but more severe slowdown with RevPAR down 2.2% on the weekend and down 4.2% on the shoulder days.
Only four of the top 25 markets — Oahu, Minneapolis, Las Vegas and Washington, D.C. — posted year-over-year RevPAR gains above 5%.
Oahu led with a 10.1% RevPAR gain driven by ADR growth of 7.5% and a 2.1-percentage-point bump in occupancy. Minneapolis was boosted by a combination of ADR and RevPAR while Las Vegas and Washington D.C.’s gain were all due to ADR.
Across the next 25 largest markets, Cleveland posted the largest RevPAR gain, up 14% led by conventions and a two-day Drake concert over the weekend. New Orleans and Nashville hotel posted sharp RevPAR declines due to a shift in Mardi Gras for New Orleans and a change in conventions for Nashville.
Global Hotel Performance
Hotel performance outside of the U.S. was generally positive except for China, where occupancy was down 18.2 percentage points year over year primarily due to the calendar shift in the Chinese New Year holiday.
Excluding China, nine of the top 10 countries based on supply posted an average occupancy of 67.6%, up 1.1 percentage points from last year. ADR increased by 1.6%, resulting in a RevPAR gain of 3.3%. Countries outside the top 10 increased occupancy 2.5 percentage points.
The continuation of Taylor’s Swifts Tour in Australia boosted the country’s hotel metrics for the week. Sunday’s performance in Melbourne and Friday/Saturday performances in Sydney lifted occupancy by 3 percentage points to 77.7% and grew ADR by 9.2%. Melbourne’s weekly occupancy increased 6.8 percentage points with ADR up 7.7%. In Sydney, the tour helped to raise ADR by 13.2% and occupancy by 1.1 percentage points for the week.
Germany’s hotels posted the largest increase in occupancy of the top 10 countries, up 5.5 percentage points versus last year. ADR continues to improve and was up 6.3%.
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.