Another springtime holiday calendar shift nipped the U.S. hotel industry in the last full week of April.
During the week of April 21-27, U.S. hotel performance paused due to the Passover observance that began on Monday, April 22. Revenue per available room declined 2.5% as occupancy fell 0.8 percentage points and average daily rate declined 1.3%.
Performance over the past six weeks has been more unstable than in past years due to unusual calendar shifts. Typically, Passover and Easter overlap, but this year the two observances occurred weeks apart. But smoothing out this impact over the past six weeks, RevPAR increased 1.4%, lifted far more by ADR — up 1.3% — than occupancy, which rose 0.4 percentage points. As of April 27, year-to-date RevPAR was up 1.3% and ADR was up 2.1%.
All hotel chain scales saw RevPAR retreat with the largest declines in luxury — down 7.4% — and upper upscale — which fell 5.8% — particularly in the top 25 U.S. hotel markets. Upscale, upper midscale and midscale chain scales saw less of an impact, with RevPAR declining between 1.4% and 0.8%. Economy hotels continued to see falling RevPAR, which was down 4.5%, but the decreases have moderated somewhat from the beginning of the year. Falling occupancy has led most of the economy hotel segment’s RevPAR declines, but over the fortnight, decreasing ADR has been the primary driver.
Over the past six weeks, the chain scales continued to perform as they did last year, with RevPAR comparisons positive in luxury (+1.2%), upper upscale (+2%), upscale (+1.8%) and upper midscale (+0.9%). Hotels in the midscale (+0.1%) and economy (-3.5%) segments have continued to struggle. For the year, RevPAR for luxury and upper-upscale hotels combined is up 3%, whereas midscale and economy is down 3.4%. Upscale and upper-midscale RevPAR is nearly flat at 0.7% growth, with stronger performance in upscale offset by upper midscale.
The largest hotel RevPAR decline was seen on Sunday at 7.1%, ahead of the Passover, which started on Monday. While down, RevPAR steadily improved as the week progressed, with Thursday’s decrease the last of the week, down 1.2%. The weekend days Friday and Saturday produced positive RevPAR comparisons (+0.5%) for the first time since early February, excluding the eclipse weekend. The increase was led by ADR, which rose 0.8%. Occupancy was down, but the decrease was the smallest of the year, excluding the eclipse weekend.
The Effect of Passover on Top 25 Markets and Group Demand
The top 25 U.S. hotel markets saw the largest impact from Passover, as RevPAR fell 5.1% with ADR falling 3.2% and occupancy declining 1.5 percentage points. As compared to the rest of the country, the day-of-week pattern was magnified with Sunday and Monday producing double-digit RevPAR declines. Tuesday through Thursday saw lessening RevPAR decreases with weekend RevPAR up slightly (+0.3%), with all of the gain coming from Friday (+1%).
While the week was slow, some markets saw double-digit RevPAR gains, including Detroit, which hosted the 2024 NFL draft and saw RevPAR increase 25.6%. RevPAR was up significantly on Wednesday (+50%) and Thursday (+78.9%).
Other markets seeing strong RevPAR growth included Seattle (+21.6%), Tampa (+17.4%), Philadelphia (+15.8%) and Miami (+13.8%). The last half of the week drove most of the growth in those markets, except for Seattle, which increased every day. Gains in group demand drove the growth.
Group occupancy at luxury and upper-upscale hotels declined 3.3 percentage points during the week. The top 25 markets decreased more than the rest of the U.S., with group occupancy down 4.8 percentage points versus 1.3 percentage points for the remainder of the country. Excluding the weeks that included New Year’s Eve, Easter and Passover, group demand has increased every week in 2024 after rising nearly every week of 2023. Group demand is expected to grow until the Memorial Day holiday, and based on first-quarter earnings calls throughout the hotel and travel industry, it will likely exceed 2019 levels in coming weeks. Group ADR fell by 0.7% during the week, but in the prior three weeks, it was up 4% or more with more strong growth expected moving forward.
In the U.S., it’s reasonable to expect a more normal performance pattern over the next four weeks as summer travel season approaches. Weekday and group demand are expected to drive RevPAR over the period.
There are headwinds for leisure travel as the U.S. nears summer, though. Consumer confidence is falling and other indicators are pointing to slower travel this summer, especially in middle-to-lower income households as the effects of inflation and higher debt costs squeeze disposable income.
Global Occupancy Still Rising
In the largest countries by hotel supply, occupancy was mostly up, led by a 4.2-percentage-point gain in Indonesia to 69.5%. Hotels in Indonesia’s capital Jakarta increased occupancy 26.7 percentage points to 75.4% as the city rocketed back to pre-Ramadan levels. RevPAR for the country rose 1.5% and so far has only declined during one week this year, which was attributable to the shift of Ramadan.
Australia’s hotels saw equally impressive occupancy growth, up 4.1 percentage points year over year to 65.2%. Its performance was supported by Adelaide, which saw occupancy increase 14.8 percentage points year over year to 73.9% due to LIV Golf. ADR in the market rose 18.8%. The event also helped the surrounding South Australian hotel market, where ADR increased 19.7%.
In the United Kingdom, hotels reported softer occupancy, which dipped 1.5 percentage points to 81.1%. Cardiff — down 9.7 percentage points to 74.2% occupancy — and Aberdeen — down 4.9 percentage points to 72.2% — felt the most impact as post-Easter holiday occupancy has grown slower than last year. London hotel occupancy was down, with the decrease equal to the total U.K.’s amount, but London’s absolute occupancy remained strong at 85.6%. London’s ADR also fell 1.7% and its decline was more than the country’s overall rate decrease, which was 0.4%.
But in the months ahead, the global hotel industry is in a much better state with demand continuing to recover.
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.