It was another strong week for the top 25 U.S. hotel markets in mid-December, which propelled total U.S. hotel revenue per available room to a three-week high.
Outside the U.S., soccer ruled in the United Kingdom and Germany with all but one of the five markets that hosted UEFA Champions league matches posting double-digit occupancy increases.
In the coming weeks, NCAA football bowl games and New Year’s Eve will provide a boost to the U.S. industry as the year winds to a close. New Year’s Eve demand is expected to be down slightly in the U.S. and up in most other countries around the rest of the world.
Here are some more takeaways and insights about hotel performance during the week of Dec. 10-16.
US Performance
U.S. hotel revenue per available room rose by 5.8%, the highest percentage of the past three weeks, which was also among the highest growth rates since April. The gain was propelled by the top 25 markets, where RevPAR was up 10.7%, driven by growth in San Francisco, Las Vegas, San Diego and several others. RevPAR outside of the top 25 markets was up 1.1%.
U.S. hotel occupancy increased 0.6 percentage points year over year to 54.7%, with average daily rate rising 4.7%, well ahead of inflation.
Like a few weeks ago with its F1 Grand Prix event, Las Vegas saw strong performance again via the National Finals Rodeo, Cowboy Christmas and a Las Vegas Raiders Thursday night game helping to drive RevPAR up 54.1% year over year. The strong growth came even with new supply from the opening of the 3,644-room Fontainebleau Las Vegas.
U.S. industry occupancy calculated without Las Vegas was still up 0.1 percentage points, and ADR gained 3.8% — ahead of inflation — to net a RevPAR increase of 4%. Las Vegas is the largest U.S. market, accounting for 3.1% of U.S. room supply. When significant events occur in a market the size of Las Vegas, especially during December, which generally sees the lowest demand of the year, the impact is felt throughout the country.
San Francisco took the top spot in top-25 performance with RevPAR up 60.3% year over year as occupancy advanced 17 percentage points and ADR rose 21.5%. The growth was led by the fall meeting of the American Geophysical Union at the Moscone Center. San Diego and New York City rounded out the list of the top RevPAR gainers with year-over-year increases of 27.3% and 25.7%, respectively. Both markets attracted increased group and transient business during the week.
As in past weeks, the top 25 markets drove U.S. hotel performance with RevPAR growth of 10.9%, dominated by strong ADR growth of 6.8% and a solid occupancy increase of 2.3 percentage points. Even when excluding Las Vegas, top 25 market RevPAR was up 7.4%, almost exclusively due to ADR increasing 5.7%. While performance in the top 25 was good, it still paled the level of growth in 2019 when occupancy reached 72.1% — versus this year’s 63% — and RevPAR jumped by 16.6% year over year.
Weekdays, Monday to Wednesday, posted the largest occupancy gains across the top 25 markets, while the highest ADR growth was on the shoulder days, Sunday and Thursday. Both weekdays and shoulder days produced a 12.5% RevPAR increase. The weekend, Friday and Saturday, in the top 25 markets showed RevPAR up 7.3%, driven by ADR, which rose 5.7%. Outside of the top 25 markets, weekday RevPAR increased 3.8%. Weekend RevPAR fell 2% due to lower occupancy and only slight ADR gains.
Group demand, which is generally slow this late into the year, posted a notable increase of 8.8% compared to the same week last year. San Francisco and San Diego increased group occupancy 18.8 percentage points and 4.3 percentage points, respectively. Atlanta also recorded a healthy gain with group occupancy up 6 percentage points, assisted by the Celebration Bowl.
The three top hotel classes — luxury, upper upscale and upscale — dominated the industry’s RevPAR growth, with gains of 8.8%, 8.6% and 7.8%, respectively. Luxury hotel performance growth came entirely from occupancy, while upper-upscale and upscale growth were a result of both occupancy and ADR growth. RevPAR in the upper-midscale segment increased 2.5%, led by ADR. Midscale hotel RevPAR remained flat compared to last year, while economy hotel RevPAR fell 4.3% on declining occupancy, which has been the case all year.
Global Hotel Performance
Global hotel occupancy, excluding the U.S., was 63.9%, continuing to slow as is typical during the holiday season. But global occupancy continued to reflect strong year-over-year growth and was up 5 percentage points. ADR growth has also moderated from double-digit gains, rising 6.5% — the smallest increase of the year. RevPAR continued to show strong growth and rose 15.6%, but that was also the smallest gain of the year.
In the top 10 countries, based on total supply, the U.K. saw occupancy advance 5.6 percentage points to 77.3%, driven by the UEFA Champions league matches. Liverpool and Newcastle, which hosted an international match, saw some of the highest growth in the country as occupancy moved 16.5 percentage points and 11.3 percentage points, respectively. Germany also benefited from the league matches with several cities posting strong occupancy growth. Overall, Germany was among highest occupancy performers at 67.3%, which was up 7.2 percentage points from a year ago.
China's hotel industry continued to post strong RevPAR gains, up 37.7%. Japan's hotels also achieved robust RevPAR growth of 26.9%, followed by Germany (+19.5%) and the U.K. (+16.9%).
Japan hotel occupancy declined by 4.7 percentage points this week, following a three-week trend. However, ADR growth has remained strong and continued to drive solid RevPAR increases.
Looking Ahead
As the year ends, it’s likely that U.S. ADR remains strong despite falling demand. College bowl games will boost markets hosting those games and their surrounding events.
New Year’s Eve, which historically produces the highest absolute RevPAR for the month, will be slightly softer than last year due to the calendar shift from Saturday to Sunday. However, we don’t expect ADR to suffer, and the industry should see strong RevPAR growth for the day.
Additionally, first-quarter occupancy on the books in the top U.S. markets is trending ahead of last year, indicating a strong start to 2024. Outside of the U.S., performance will remain robust, slowing as the new year advances.
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.