Global hotel performance has a bit of a “Groundhog Day” effect in the sense that the same results are occurring over and over again around the world.
Year over year, every world region across the globe has a hotel occupancy within 10% of each other in June 2023. Kelsey Fenerty, manager of analytics for STR, said during her “Around the World Data Tour” presentation at the 2023 Hotel Data Conference that it’s “crazy” that the numbers align so closely given the year-to-date changes in occupancy in some regions; occupancy grew only 3% in North America while it increased 40% in Mainland China, but the two are only 1% off.
Indexed to 2019, the global occupancy recovery percentages are even closer, with the exception of Asia — excluding China — and Australia and Oceania down 8% and 7%, respectively, of 2019 levels and Central America up 8%. All other regions are between a range of down 4% to up 1%, indicating the path to recovery is similar globally.
Average-daily-rate change compared to 2019 and 2022 levels, however, is vastly different from region to region, Fenerty said. For example, Northern Africa’s ADR in June 2023 was up 53% from 2022 levels and 81% from 2019. North America’s ADR in June 2023 was up 6% compared to 2022 and 19% higher than in 2019.
“ADR is a little bit more of a mixed bag on this. There’s some variance in index and there’s some variance in year over year,” she said.
The commonality between all regions is some form of inflation, she said. Nearly every region has some form of hyperinflation in a specific country that skews the region’s total change.
“Northern Africa, that’s Egypt — that is almost entirely Egypt. You have Turkey in Europe, you have Argentina in South America; everywhere you go, inflation is a factor more or less to some degree,” she said.
Summer Leisure Demand Normalizes
In summer 2022, leisure demand not only recovered to 2019 levels, but surpassed them due to cities opening back up and “revenge travel” coming out of the pandemic. Those numbers are starting to come back down to Earth in 2023.
Occupancies over the past three months are down in European and North American leisure markets year over year. Some U.S. markets experiencing a significant decrease are New Orleans, Miami and Orlando, which are down 8.4%, 4.7% and 3.2%, respectively.
This isn’t necessarily a sign to worry, though, Fenerty said. The market occupancies are greater than or close to full pre-pandemic numbers.
“When you put it to an index, [leisure demand] still looks really good; it’s just a reset,” she said. “It’s coming back into our normal travel trends. We’re not so crazy for vacation, we don’t have all that time saved up and we’re getting back into what we would normally do as far as vacations go and heading back into cities as well.”