In a week refreshingly absent of calendar shifts, market moving events and weather-related disruptors, U.S. hotel performance looked quite healthy to close out January.
Revenue per available room rose a healthy 4.1% for the week of Jan. 26 to Feb. 1. Growth included contributions from both average daily rate and occupancy, up 1.8% and 1.2 percentage points, respectively.
Weekdays from Monday to Wednesday showed the largest hotel RevPAR gain (+8.3%). Shoulder days Sunday and Thursday were up 3.2%, but the weekend days Friday and Saturday fell 1.5%. This pattern was more exaggerated for the top 25 U.S. hotel markets with weekdays seeing even greater RevPAR gains and the weekend showing the largest decline.
Averaging the past four weeks revealed an ADR-dominated environment where ADR grew 2.3% and drove RevPAR up 1.7%. The top 25 markets led the U.S. hotel industry during this time with ADR up 3.2%, driving a RevPAR increase of 3.4%. Outside of these markets, ADR increased 1.3% with basically flat RevPAR (+0.2%).
Bifurcation returns; hurricane markets boost midscale and economy chains
Bifurcation returned to chain-scale performance with RevPAR growth ranging from up 8.2% among luxury hotels to up 1.3% for economy hotels. Occupancy growth drove RevPAR gains in upper upscale and upscale hotels, whereas ADR was the primary driver in midscale and economy. Luxury and upper-midscale hotels saw even increases in occupancy and ADR.
For the past several months, the lingering impact of Hurricane Helene and Hurricane Milton has lifted the U.S. hotel industry’s performance, especially in lower-tiered chain scales. This past week was no exception with the previously identified 13 hurricane markets in the Southeast adding 1.3 percentage points to the total industry’s RevPAR gain. Excluding the 13 markets from the chain scales, the impact was almost exclusively in the bottom three: upper midscale, midscale and economy. The largest difference was seen in economy hotels, where weekly RevPAR percentage change ranged from up 1.3% to down 2.5%. Midscale RevPAR shifted from up 2.5% to down 0.6%, and upper midscale hotel RevPAR ranged between up 3.4% to up 2%. The top three chain scales, excluding the 13 hurricane markets, moved their results by less than 0.5 percentage points. This means that the bifurcation among the chain scales is even more pronounced than what the overall results show.
Market highlights
Across the top 25 U.S. hotel markets, Minneapolis saw the largest RevPAR gain (+16.7%) due to healthy midweek performance and a strong weekend. Philadelphia (+15.7%) took second place with Sunday’s NFC championship game elevating the week. Overall, it was a good week for most of the top 25 markets with 19 showing positive RevPAR.
Across the next 25 markets, double-digit RevPAR increases were seen in six of these markets, led by Kansas City, where the measure rose 31.7%, boosted by Sunday’s AFC Championship game. Charlotte saw strong performance all week, while Indianapolis experienced a significant lift on the weekend as host of the WWE Royal Rumble. Salt Lake City posted strong midweek performance, benefiting from the annual Sundance Film Festival.
Los Angeles
Hotel RevPAR remained elevated in the greater Los Angeles area (STR-defined markets: Los Angeles, California Central Coast, Inland Empire, and Orange County), up 8.4% for the week.
Ten of the 24 hotel submarkets reported double-digit weekly RevPAR gains led by Pasadena/Glendale/Burbank (+53%), Los Angeles East (+37%) and Los Angeles North (+26%). Room demand in these markets was also up by double-digits. The Los Angeles Central Business District, which had been suffering, saw RevPAR grow 17.5%, mostly through ADR.
From Jan. 7 to Feb. 1, hotel RevPAR in the greater Los Angeles area was up 7.7% on occupancy increases as ADR was mostly flat (+0.9%). RevPAR in Pasadena/Glendale/Burbank was up 48% over the same 28 days followed by Los Angeles East (+38%) and Los Angeles North (+26%). On the opposite end, the measure was down by more than 7% in Disneyland and Hollywood/Beverly Hills. The former was up in the latest week of reporting while the latter was significantly down.
A great week for hotel group demand across the country
Across luxury and upper-upscale hotels, group demand increased 7.9% and exceeded 2019 levels by 3.9%. ADR was essentially flat, up just 0.7%. Strong group gains were seen across the top 25 markets (+6.8%) and all others (+7.4%). Eleven of the top 25 markets posted double-digit demand gains. Group ADR increased 4.8% outside the top 25 markets while a slow week for group demand in Las Vegas weighed down on the top 25. Excluding Las Vegas, group ADR in the top 25 markets rose 2.8%.
What US hoteliers can expect
Business and group travel drove the final week of January and is expected to drive the week of Feb. 2-8. We anticipate the month of February to be positive as occupancy on the books is nearly three percentage points above last year. Super Bowl weekend is looking good with bookings for the New Orleans markets at 90%, up two percentage points from last week with the Central Business District/French Quarter at 97%. The 13 hurricane markets and greater Los Angeles will continue to see elevated demand for the foreseeable future.
Lunar New Year contributes to strong performance in China
Outside the U.S., global weekly hotel RevPAR increased 18.6%, driven entirely by ADR gains as occupancy was flat, up 0.2 percentage points. Lunar New Year, which is celebrated in China and other Asian countries, had a significant impact on performance. China alone added 3 percentage points to global RevPAR.
The calendar shift of the14-day Lunar New Year celebration to a Wednesday start – Jan. 29 – compared to last year’s Saturday start – Feb. 10 – affected not only the actual dates but the day of week. The beginning of the week in China saw RevPAR down double-digits until Wednesday when performance turned positive. For the week, China’s RevPAR increased 39.1% with ADR driving the increase as occupancy fell. The decrease in occupancy occurred Sunday through Wednesday. Guangdong, China’s third largest market in room supply, posted RevPAR gains of more than 100%.
Indonesia also posted significant RevPAR gains with some impact due to the change in the Lailat al Miraj observance that occurred one week earlier this year on Jan. 26-27 compared to Feb. 6-7, 2024.
Japan and Mexico continue to see strong RevPAR lifted by ADR and the impact of their weakened currencies against the dollar.
France posted strong RevPAR performance buoyed by Paris Fashion Week.
Looking ahead, China and Indonesia are expected to see strong performance with the continuation of Chinese New Year. Japan and Mexico are also expected to see ADR-driven RevPAR growth, due in part to their weak currencies.
Isaac Collazo is senior director of analytics at STR. Chris Klauda is senior director of market insights 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.