U.S. occupancy continued to fall short from last year’s level.

Some of the challenges include changes in travel patterns, from resorts to top 25 markets and/or international outbound. Average daily rate is softening, which is not surprising given the changes in demand from pure leisure to a more normal mix of business transient, group and leisure.

U.S. hotel performance rose heading into summer with occupancy of 70.8%. That level was up 1.5 percentage points from the previous week but down 0.8 percentage points from last year. The past couple of weeks have produced relatively modest performance compared to the same week last year. With international borders now fully open, Americans’ pent-up demand for international travel is resulting in a softening in domestic travel.

On the flip side, international travel to the U.S. has yet to fully recover. Comparing May 2023 to May 2019, 8% more Americans traveled internationally while 19.6% fewer international visitors entered the U.S., according to the U.S. International Trade Administration. Over the next couple of months, the travel and hotel industries will pay close attention to the pace of the return of international travel.

As has been seen in recent weeks, shoulder days on Sunday and Thursday and weekends – Friday and Saturday – showed declines. In this most recent week, Sunday produced the largest year-over-year occupancy loss at 2.1 percentage points, followed by Friday – which was down 1 percentage point – and Thursday and Saturday, which were each down 0.9 percentage points. Weekday occupancy from Monday to Wednesday reflected a smaller decline at 0.3 percentage points.

The U.S. top 25 markets fared much better with weekly occupancy of 75%, down 0.4 percentage points year over year compared to down 1 percentage point to 68.6% for the rest of the country.

Weekday occupancy in the top 25 markets reached a post-pandemic high of 76.6%, up 0.4 percentage points year over year, reflecting the slow but steady return of business travel along with increased vacation travel. Weekend travel declined by 0.5 percentage points to 78.6%.

Across the rest of the country, weekday occupancy declined 0.6 percentage points, and weekend occupancy was down 1.2 percentage points.

Revenue per available room increased 1.5% year over year after falling in the prior week. Average daily rate rose 2.6%, offsetting the decrease in occupancy. When adjusting for inflation, weekly real RevPAR was down 2.5% year over year and has fallen for the past six weeks. Real ADR was also down 1.4%, which was the sixth consecutive weekly decline.

Shoulder days showed the largest RevPAR decrease, down 1%, with the metric growing on weekdays by 3.6% and modestly on weekends – up 0.6% – driven by ADR growth of 4% and 1.9%, respectively. Top 25 RevPAR was up 2.6% year over year with real RevPAR down 1.4%. Non-top 25 RevPAR was up 0.6% year over year. Real RevPAR decreased 3.3% year over year.

The week also reflected a shakeup in the top 25 market occupancy rankings.

Seattle had the nation’s highest occupancy at 86.8% as various travel inducers came together. The weekend was led by sporting and concert events – Mariners baseball and a George Strait concert. Weekday occupancy was boosted by two large conferences and the seasonal return of the cruise industry to Seattle ports. As a result, the market’s occupancy was its highest since the start of the pandemic.

New York City posted 85.8% occupancy and, after holding the top spot for seven consecutive weeks, had the nation’s fourth highest level behind San Diego (86.5%) and Alaska (84.1%).

Among the top 25 markets, Oahu saw the largest year-over-year occupancy gain – up 8.3 percentage points – as occupancy reached 84.1%.

As host of the PGA’s U.S. Open, Los Angeles saw strong weekend occupancy of 87.9%, up 8.3 percentage points, and a large year-over-year gain in ADR, which rose 20.2%.

Philadelphia also reported a solid week with its weekly occupancy reaching 73.4%, its highest since the start of the pandemic.

Top markets across the rest of the country included a diverse set of destinations from Alaska to the Florida Keys and several markets in the central U.S.:

• Alaska posted the top occupancy at 85.9%, affected by over 21 hours of functional daylight in June and the recovering cruise industry.
• Gatlinburg, Tennessee, followed at 82.7% with the Florida Keys rounding out the list of markets crossing the 80% occupancy line at 82.4%.
• Omaha, at 79.8%, hosted the NCAA College Baseball World Series for its second week in a row with an occupancy increase in excess of 5 percentage points.
• Kansas City occupancy was 75.2%, which reached its highest level since the start of the pandemic with a full week of conventions, concerts and sports driving strong performance.
• Pittsburgh saw the nation’s highest year-over-year ADR growth rate at 38.7%, driven by an 80.9% gain over the weekend with the arrival of Taylor Swift’s Eras tour. Weekend occupancy jumped by 20.9 percentage points to 93.3%.

Based on history, U.S. occupancy will increase for the week ending June 24 and fall in the following two weeks before reaching the annual peak in mid-July. As seen in STR’s Forward STAR data, this summer is poised to resemble last summer. However, ADR growth is likely to remain somewhat muted as the demand mix normalizes. As a result, RevPAR is anticipated to be flat to slightly down as compared to last year.

Group demand among luxury and upper-upscale hotels exceeded last year’s levels by 2% while dropping 5.4% from last week. This most recent week represented the peak for group travel for the summer and will continue to decline until the fall season picks back up.

Among the top 25 markets, Las Vegas saw the largest week-on-week gain in group demand. Los Angeles, Minneapolis, St. Louis, San Diego, and Seattle also saw solid group gains.

Transient demand among luxury and upper upscale increased 1.6% year over year and increased 4.9% over last week.

Combined group and transient occupancy across the hotel classes showed luxury occupancy at 73.5%, declining 0.8 percentage points year over year, while upper upscale at 74.3% increased 0.7 percentage points year over year. The highest occupancy among the hotel classes was upscale at 77.1%. Midscale and economy hotels continued to see declining occupancy at by 2 percentage points and 2.9 percentage points year over year, respectively.

Outside of the U.S., the recovery remained in full swing. Across all parts of the globe, large gatherings around concerts, sports and festivals will continue to drive performance throughout the summer.

Global occupancy excluding the U.S. reached a post-pandemic high of 70.9%, up 6.7 percentage points year over year. ADR increased 14.8% year over year to $153, resulting in RevPAR of $109, also a post-pandemic high and up 26.8% year over year.

Occupancy for the top 10 countries, based on total supply, was 73.2%, up 8 percentage points year over year. All but France posted year-over-year occupancy growth. Occupancy in France was flat year over year with the biggest gainer being China, up 14.8 percentage points to 69%.

Germany was up 11.2 percentage points to 78.1%, aided by fairs, notably, two quadrennial exhibitions GIFA (Foundry and metal exhibition) and Thermprocess in Dusseldorf. Beyonce also stopped in Berlin with her Renaissance Tour concert on June 15.

The U.K. continued to lead the top 10 with occupancy of 83.6%.

ADR for the top 10 countries grew 13.1% year over year to $145. RevPAR for the top 10 was $106, which was up 26.9% year over year. All countries except for Mexico saw year-over-year RevPAR growth with Japan continuing to see the highest year-over-year growth, up 97%.

Outside of the top 10 countries, destinations known well for leisure and holidays came in hot with some of the highest global occupancy figures:

• Ireland hotel occupancy rose 2.2 percentage points to 89%. Ireland again had the world’s highest occupancy as it has for the past six weeks.
  
• Greece occupancy increased 5.9 percentage points to 87.9%.
  
• Malta hotel occupancy rose 19 percentage points to 87.2%.
  
• Fiji’s occupancy increased 8.4 percentage points to 87.1%.

Global hotel performance, excluding the U.S., is expected to see healthy growth over the next several weeks.

Chris Klauda is senior director of market insights at STR. William Anns is an analyst at STR. Isaac Collazo is vice president of 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.