U.S. hotel occupancy continued to grow during the week of June 18-24 as summer builds, but occupancy has fallen short of last year’s level for the past four weeks.

The Juneteenth holiday led to weaker business and group travel in the U.S. Other challenges include changes in travel patterns, from resorts to top 25 markets and/or international outbound. Concerts, sporting events and festivals are driving demand, making it the era of epic events. 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.

Officially one week into summer, U.S. occupancy rose to 71.4%, up 0.6 percentage points from the previous week but down 0.7 percentage points from last year. Average daily rate grew 0.9% year over year to $159. Revenue per available room stayed essentially flat year over year (-0.1%) at $114 due to the slight drop in occupancy.

This modest performance compared to the same week last year is a continuation of a trend seen over the past several weeks. An increase in Americans traveling abroad in 2023 is affecting domestic performance, and there are fewer international travelers coming to the U.S to make up the difference. However, room demand for the week wasn’t too bad as it was the fourth highest for this particular week over the past 23 years.

Day-of-week shifts happened in part due to Juneteenth, which fell on Monday, June 19. Due to the pandemic and the newness of the holiday, which received federal status in 2021, this holiday had a minimal impact on travel until this year. Across all markets, Monday’s 64.3% occupancy decreased 1.2% week over week.

Historically when a Monday holiday occurs, business travelers stay home, and company group events are pushed to later in the week or a different week. On the flip side, Monday holidays drive increased leisure travel as people take advantage of a three-day weekend that enables more travel. The change in this business/leisure travel dynamic can been seen in the performance of the top 25 markets – where business travel plays a larger role – especially on weekdays.

• As compared to last year, Monday occupancy fell the most (-2.3 percentage points) with Sunday (-1.2 percentage points), Tuesday (-1.0 percentage points) and Wednesday (-0.8 percentage points) also showing declines.
  
• Thursday occupancy fell 0.2 percentage points and Friday occupancy was down just 0.1 percentage points, whereas Saturday was up 0.3 percentage points.
  
• ADR increased 0.4% for the week. Days with the greatest occupancy declines also produced the greatest ADR declines with Monday reflecting the largest decrease, down 2.2%. Saturday and Friday produced the greatest increases of 2.2% and 1%, respectively.

For the rest of the U.S., weekly occupancy was down 0.7 percentage points year over year, the same rate as the top 25 markets but with some notable differences:

• Monday occupancy was down much less than the top 25 markets – down 0.7 percentage points year over year – with Wednesday (-0.6 percentage points) and Thursday (-0.9 percentage points) also down less than the top 25.
  
• Sunday and Tuesday showed the smallest declines, down 0.1 percentage points and 0.2 percentage points, respectively.
  
• Friday and Saturday reflected the greatest year-over-year occupancy declines of 1.4 percentage points and 1.2 percentage points, respectively. This is consistent with what we have seen recently as these top 25 markets saw strong pent-up demand a year ago.
  
• ADR for non-top 25 markets increased 1.3% as compared to 0.4% growth for the top 25. Tuesday and Wednesday showed ADR increases of 2% or more. Consistent with the softer occupancy, Friday and Saturday ADR produced minimal increases of 0.5% and 0.3%, respectively.

Gatlinburg, Tennessee, had the nation’s highest weekly occupancy at 86% followed by Alaska at 85.2% and New York City at 84.7%. Other markets seeing solid occupancy included Omaha at 82%, host of the NCAA Baseball World Series.

Concerts, sports, Pride events and Juneteenth celebrations boosted performance across many U.S. markets, especially over the weekend. The top 25 markets saw weekend occupancy of 82.8% with Denver and Minneapolis, which hosted Taylor Swift’s Eras Tour, posting their highest weekend occupancy post-pandemic. Portland, Oregon, hosted a Formula E racing event at Portland International Raceway — think Formula1 racing with electric cars — reaching its highest weekend occupancy since the pandemic of 85.5%. Almost half of all markets across the U.S. saw weekend occupancy above 80%.

Group demand is softening as expected now that school is out, and vacation season has begun in earnest. Additionally, the Juneteenth holiday also had an impact on groups. Group demand among luxury and upper-upscale hotels decreased compared to last year’s levels by 4.3% and dropped 3.6% from the prior week.

For the week ending July 1, U.S. occupancy is expected to rise slightly before dropping in the week ending July 8. 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 and is anticipated to fall week over week for the next two weeks. As a result, RevPAR is anticipated to be flat to slightly down as compared to last year.

Outside of the U.S., the recovery remained in full swing.

Global occupancy excluding the U.S was 69%, down slightly from last week’s post-pandemic high of 70.9%. Despite the week-on-week decrease, occupancy continued to strengthen, up 3.7 percentage points year over year. Nominal ADR was up 21.1% from the comparable week last year to $163, resulting in RevPAR of $112, up 28% year over year, a post-pandemic high.

Among the top 10 countries, based on supply, occupancy increased 3.5 percentage points year over year to 70.5%, also down from last week’s post-pandemic high. ADR for the top 10 countries grew 20.5% year over year to $160 with RevPAR increasing to $113, up 26.8% year over year. All key countries saw positive RevPAR comparisons except Germany and Mexico.

• As it has for the past six weeks, the United Kingdom continued to lead the top 10 in occupancy with a level of 84%, up 2.5 percentage points from a year ago. ADR also grew a strong 11.2% year over year.
  
• RevPAR in France increased 49% year over year on strong ADR and occupancy gains.
  
• China’s RevPAR was up 42.6% with an occupancy gain of 4.5 percentage points along with a 32% ADR increase.

Outside of the top 10 countries, destinations known well for leisure and holidays posted the highest occupancy again as they have for the past four weeks. Countries included were:

• Ireland, where hotel occupancy was 90.2%, up 3.1 percentage points year over year.
  
• Greece, where occupancy was 87.7%, up 4.6 percentage points.
  
• Malta, where occupancy reached 86.8%, up 20.3 percentage points.
  
• Fiji, where hotels posted 86.3% occupancy, up 6.2 percentage points.

Global performance, excluding the U.S., will 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.