Meetings of world leaders and the shift of Yom Kippur to October this year led to one of the biggest performance weeks for U.S. hotels in the final full week of September.
U.S. hotel revenue per available room rose 10.2% year over year for the week ending Sept. 28, driven by a 7.5% increase in average daily rate. The ADR gain was the largest of the past 80 weeks.
New York City contributed 3.7 percentage points to the national RevPAR growth rate due to the United Nations General Assembly. Its contribution to national ADR was nearly the same amount. While historically a strong week for New York City, calendar shifts of both the U.N. as well as the Yom Kippur observance helped drive overall U.S. performance.
Even excluding New York City, U.S. performance was strong with RevPAR increasing 6.5% on ADR (+4%) and occupancy (+1.5 percentage points) with benefit from the Yom Kippur shift. Weekdays from Monday to Wednesday were the primary beneficiary with RevPAR rising 9.4%. The shoulder days Sunday and Thursday followed with RevPAR up 5.6%, and on the weekend days Friday and Saturday RevPAR rose 3.6%.
All hotel chain scales posted RevPAR gains ranging from luxury up 25.3% to the economy hotel segment with the lowest increase at 1.8%. Most RevPAR increases were driven by ADR at twice the rate of occupancy.
Most top 25 markets along with football host markets ruled the week
More than a third of U.S. hotel markets — 63 of the 171 — saw double-digit RevPAR growth during the week. Across the top 25 U.S. hotel markets, 20 saw RevPAR growth, led by New York City with a RevPAR increase of 70.1% on a 52.8% ADR increase. Weekday RevPAR in the city was up 108.5%. This particular week is normally a strong one for the city. In the 10 years ending 2019, the Big Apple recorded its highest absolute RevPAR of the year seven times during this week, and 2024 will join this list as RevPAR topped $488.
Hotels in San Diego (+26.4%) and Chicago (+25.5%) were the next two top performers with double-digit RevPAR gains across all day categories. Among the next 25 largest markets, 19 saw RevPAR gains with Pittsburgh (+32.2%) and Columbus (+19.4%) seeing the largest increases driven by shoulder and weekday periods. With football season in full swing, weekend hotel RevPAR growth soared with the measure increasing by more than 50% in the following six markets:
- Michigan South, home of the University of Michigan in Ann Arbor.
- Louisville, home to the University of Louisville.
- Indiana North, home of the University of Notre Dame in South Bend.
- Louisiana South, home to Louisiana State University.
- Syracuse, home to Syracuse University.
- Alabama North, home of the University of Alabama in Tuscaloosa.
The devastation brought about by Hurricane Helene’s flooding affected multiple hotel markets and submarkets late in the week. While the impact to the hotel industry is still being evaluated, immediate weekend RevPAR decreases due to the storm were seen in Gatlinburg/Pigeon Forge, Tennessee, where RevPAR fell 40%; and North Carolina West, where RevPAR dropped 32.5%.
Group demand gains continue while transient demand softens
Group demand for luxury and upscale hotels increased 14.3% to 2.4 million rooms sold, its second highest level since Fall 2019 with the highest level achieved last week. Group ADR increased 18.1%. Excluding New York City, group demand growth stayed in double digits, up 13.5%, while group ADR slowed to a still healthy 5.5% increase. Nineteen of the top 25 U.S. hotel markets posted group demand gains with all but three also posting ADR gains. Markets across the rest of the country also saw gains in group demand, up 9.1% with ADR increasing 3.9%. Transient demand was up a modest 1.1% with markets outside the top 25 driving this demand gain by 1.8%. Across the top 25 markets, transient demand declined 1.2%.
Calendar shifts make a difference
There are four religious observances throughout the year that affect U.S. travel patterns due to their movement from one year to the next: Passover, Easter, Rosh Hashanah and Yom Kippur. Additionally, the day of the week they occur is also a factor. Weekday observances have a more negative effect than weekend observances.
This week, Yom Kippur’s change benefitted the U.S. hotel industry. A year ago, observance of the holiday began Sunday, Sept. 24, and ended Monday, Sept. 25, reducing weekly room demand as group and meeting planners avoided the week. This year, the Yom Kippur observance occurs between Friday, Oct. 11 and Saturday, Oct. 12. Because it falls on the weekend, the impact to hotels will be less.
Hotel room demand for the week ending Oct. 5 is expected to be flat to down based on STR’s Forward STAR data, due to the Rosh Hashanah observance. Hotel performance is expected to pick up in the week ending Oct. 12, even though Yom Kippur occurs at the end of that week. The remainder of October also looks good up until the week of Halloween which occurs on Thursday this year.
Significant hotel performance growth in Germany affected by trade fairs and Oktoberfest
Weekly global hotel RevPAR excluding the U.S. increased 9%, driven primarily by a 4.1 percentage-point-increase in occupancy, which reached a six-week high at 72.8%. ADR increased 2.9%. Strong growth was seen in most of the 10 largest countries based on hotel supply, led by Germany.
Germany recorded a notable hotel RevPAR gain of 27.7%, driven by a 23.3% rise in ADR. Two events drove the increase: Oktoberfest and InnoTrans. In Munich, the start of Oktoberfest propelled ADR by 16.8% with occupancy rising 7.6 percentage points. Additionally, the biennial InnoTrans event in Berlin drove ADR up by 77.2% while hotel occupancy remained steady at 87.2%, down 0.5 percentage points.
Australia saw hotel performance wane with occupancy down 1.6 percentage points and ADR falling 5.9%. Sydney saw a more significant drop as hotel occupancy fell 5.1 percentage points and ADR dropped 8.3%; hotels in the surrounding region dropped 13.9 percentage points in occupancy and experienced an 18.7% ADR decline. Difficult comparisons to last year’s World Academic Summit caused hotel performance in the area to slump this year. In contrast, Adelaide's performance improved, with occupancy rising 11.6 percentage points to reach 80.2%.
China saw RevPAR improve 5.6%, driven primarily by occupancy increasing 18 percentage points as ADR fell. Because of the Golden Week holiday that began Oct. 1, some hotels did not report results this week, which likely affected overall country and global results. However, even when excluding China, global RevPAR was still up 9.6% on strong ADR gains (7.7%) with occupancy reaching its highest level of the year so far (74.4%).
Global hotel performance is expected to remain strong at a more modest pace as it returns to normal with the impact of shifting holiday calendars continuing to produce week-over-week volatility.
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.
(Corrected on Oct. 4 to update the time frame in the headline.)