Demand for hotel rooms picked up again after the week of Thanksgiving, and the U.S. hotel industry sold the second-highest number of rooms on record for this week.
Still, weekly demand growth of 10% was below the expectations of STR, CoStar’s hospitality analytics firm, which is calling for demand to continue to rise ahead of the Christmas and New Year’s holidays.
For the week ending Dec. 3, occupancy increased to 55.4% from 50.3% in the week prior.
The high for most rooms sold in the post-Thanksgiving week was achieved in 2019, and this year’s level was 6% lower. In 2019, occupancy reached 60%, also a record, while this year’s occupancy ranked ninth overall.
The smaller-than-expected bump in weekly hotel demand was due in large part to less group business and the fact that business travel did not start in earnest after the holiday.
Compared to the same week in 2019, weekday (Monday to Wednesday) occupancy was down 8 percentage points, which is indicative of lower hotel demand from business travelers. It was the hotel industry’s worst weekday performance since the week of Halloween, as more than 80% of U.S. hotel markets recorded occupancy deficits, and that deficit was 10 percentage points or more in 29% of all markets.
The occupancy gap to 2019 was narrower on the shoulder days of Sunday and Thursday, and on the weekend, down 2.9 percentage points and 1.1 percentage points, respectively.
A lack of group business at upper-tier hotels also contributed to the weekday occupancy weakness. Group demand for hotel rooms was 28% lower than it was in the comparable week of 2019.
Weekday demand and occupancy was weakest at luxury and upper-upscale hotels, as well as hotels with 300 or more rooms, which tend to rely on bookings by groups.
Luxury and upper-upscale weekday occupancy was down 18 percentage points from 2019.
Upscale hotels didn’t do much better, with a 15-percentage-point deficit in weekday occupancy compared to 2019. But the upscale segment did have its third-highest room demand ever for the week after Thanksgiving, and the highest of all chain scales, at 59.9%.
Weekday occupancy at upper-midscale hotels was 57.7%, 6.7 percentage points behind 2019. Midscale (47.8%) and economy (49.9%) hotels were the closest to 2019 weekday occupancy levels, down 1.7 and 0.4 percentage points, respectively.
For the full week, luxury hotels still posted the highest occupancy of any chain scale at 60.6%, followed by upscale hotels at 60.5%. The upper-upscale segment wasn’t too far behind at 59.0%. While lower than the previous three, upper-midscale occupancy for the full week was 57.5% and room demand in the segment was the highest for a post-Thanksgiving week since 2000.
Occupancy by hotel size also is telling. In 2019, 61% of large, upper-tier hotels had weekday occupancy above 70% for the week after Thanksgiving. This year, only 26% were at that occupancy level, and a third reported occupancy below 50%. The lack of group demand was a significant factor, but doesn’t account for all of the decline as transient occupancy was also down.
It’s possible that 2019 was an outlier. Based on historic daily data, weekday occupancy was only 3.6 percentage points below the 10-year average (2010-2019), and weekend occupancy was higher than the 10-year average.
Weekend occupancy reached 64.5% for the week, the third highest for a post-Thanksgiving week on record behind 2019 and 2021.
Hotel average daily rate and revenue per available room exceeded 2021 levels.
ADR was $142, up 10.3% year over year and the highest-ever for a post-Thanksgiving week. Adjusted for inflation, however, ADR was still lower than it was in the comparable week of 2019.
That year-over-year growth rate in ADR was lower than it was prior to the Thanksgiving holiday, and weekday rates make up most of the difference.
Weekday ADR was up 11.2% year over year, compared to a 9.2% increase in weekend ADR.
Since early in the year, weekday ADR has been increasing faster than weekend ADR on a year-over-year basis. Over the past 12 weeks, the gap between weekday and weekend ADR growth was nearly 7 percentage points. In this most recent week, the gap narrowed to just 2 percentage points.
Revenue per available room was up 11.7% year over year to $79, which was also the best since 2000 but $10 under the 2021 value when adjusted for inflation.
In the 12 weeks before Thanksgiving, the year-over-year RevPAR increase averaged 23%. Real, inflation-adjusted RevPAR was lower than the 2019 value for the second time in the past seven weeks, down 12%.
Market Performance
The highest hotel occupancy in the nation was in the Fort Myers, Florida, market at 81.1%. Miami and New York City led the top 25 U.S. hotel markets for the week with 80.4% and 77.9% occupancy, respectively.
New Orleans, however, was the only top 25 market to top its 2019 occupancy level for the week.
Among the remaining U.S. markets, 38 posted higher weekly occupancy than in 2019. Most of the markets in that group are rural or smaller, led by Fort Myers, where demand continues to be driven by post-Hurricane Ian recovery.
Occupancy in the San Francisco market was down 31 percentage points from the same week in 2019, the largest deficit among the top 25 markets. Still weekly occupancy in most of the top 25 — including Boston, Chicago, New York City and Washington, D.C. — was down 10 percentage points or more from 2019.
Forty-one markets reported weekend occupancy above 70%, led by New York City at 90% and followed by Sarasota, Florida, at 87% and Miami at 86.7%. New York City weekend occupancy has reached 90% or greater eight times since September and nine times total this year. During the same 14 weeks in 2019, occupancy surpassed 90% a total of 10 times.
Maui reported the highest ADR for the week at $470, followed by Miami at $375, New York City at $356 and Hawaii/Kauai at $317. ADR increased by more than 5% year over year in 69% of the 166 STR-defined markets, with a third posting gains of 10% or more. Weekly ADR fell year over year in 13 markets, including Louisiana South and the Florida Keys, where ADR decreased by more than 10%.
Full-week ADR increased 11.9% year over year in the top 25 markets versus 7.9% in all others.
Inflation-adjusted, real RevPAR beat 2019 levels in 97 markets. Only four markets — New Jersey Shore, Oakland, San Francisco and San Jose — were in STR’s “recession” category, with real RevPAR between 50% and 80% of 2019 levels.
Isaac Collazo is VP 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.