Despite ongoing performance improvements for the industry at large, midweek demand and occupancy are still well below 2019 averages. Full-year data for 2022 reveals a pattern that points to occupancy recovery that stalled out at around 10% below prior peaks.
Reasons are likely numerous but center around the more-efficient ways to conduct one-on-one meetings online and the lack of full return-to-office plans by many white-collar workers. Weekends and shoulder days, those that fall next to weekends, have benefitted from strong leisure demand and the ability of workers to start or end their weekends on Thursday or Sunday, respectively, while still being productive from hotel rooms.
However, the lack of transient occupancy recovery in full-service hotels stands in contrast to better results for limited-service hotels. Anecdotally, publicly traded hotel companies have reported seeing stronger demand in drive-to markets by small and medium businesses. Sales teams and technicians of those smaller corporations continue to frequent hotels at lower price points and drive occupancy gains in that sector.
Looking ahead, the return of the white-collar, high-paying business road warriors remains very much in question. The implications for downtown full-service hotels are for continued weakness in mid-week occupancy and likely only limited pricing power for those slower demand days. On the flip side, roadside or suburban limited-service hotels should continue to see demand and occupancy at or even above 2019 results.