U.S. weekly hotel performance continues to rev up with the largest week-over-week increase in occupancy this year, and the best weekly improvements in rates and rooms revenue in nearly a year, excluding the Christmas and New Year holiday week.
Much of that improvement is attributable to the 25 largest U.S. hotel markets and greater demand for hotel rooms on weekdays. Los Angeles, the site of this year’s Super Bowl, had the nation’s eighth-largest occupancy increase this week with weekly occupancy topping 69%.
Performance data from CoStar hospitality analytics firm STR shows total U.S. hotel occupancy reached 54.6% for the week ending Feb. 12 — a 4.2-percentage-point improvement over the prior week. In absolute terms, occupancy was the highest since the second week of December.
Average daily rate for U.S. hotels was up 6.8% week over week, which combined with the boost in occupancy lifted revenue per available room for the week by 15.6%.
The occupancy gain was most significant over the weekend — Friday and Saturday — up 6.6 percentage points to 64.1%. Of the 166 STR-defined markets, 91% reported week-over-week gains in weekend occupancy. Even more impressive, 36% of all U.S. markets reported weekend occupancy above 65%.
Weekend hotel demand was powered somewhat by Valentine’s Day, even though it fell on a Monday this year. Despite the week-over-week improvement, weekend occupancy was only 87% of what it was in the same week of 2019, and that index was down 4.5 points from the previous week, the second consecutive weekly decline.
But weekday — Monday to Wednesday — occupancy also improved by 3.7 percentage points to 52.5%, indicating a rise in business travel and demand, which has in large part been the missing piece in the hotel industry’s recovery from the pandemic.
Occupancy on Sunday and Thursday — shoulders days — was also up 2.5 percentage points.
The gain in weekday occupancy was led by the top 25 markets, where weekday demand increased 11% week over week.
Weekend occupancy in the top 25 markets improved by 8.2 percentage points week over week to 67%, which was also higher than the national average and 84% of what it was in the same week of 2019.
The top 25 markets also drove ADR growth with a 12% week-over-week gain, led by Los Angeles, which was up 59%, and Phoenix, which was up 22%. Weekend ADR growth in the top 25 was even higher, up 17% week over week.
As a result, RevPAR in the top 25 was also up 25% week over week, leading the nation. All but one market in the top 25 reported a RevPAR increase. More astonishing, 17 of the top 25 markets reported double-digit, week-over-week gains in RevPAR.
For the first time this year, hotel occupancy across all chain scales was above 50%.
Weekday upper-upscale hotel occupancy in the top 25 markets rose 7 percentage points to 48%. The largest weekday occupancy gain was among luxury hotels — up 8 percentage points to 46%.
Some of the improvement among these hotels came from group demand. Group demand among luxury and upper-upscale hotels increased for the sixth consecutive week.
Remarkably, group demand in Los Angeles, Orlando, Phoenix and Tampa looked almost normal. Overall, group demand for the week was 59% of what it was at this time in 2019; a week ago, that index was 48%.
As it has for the past 38 weeks, the hotel industry remained in STR’s “recovery” category, with RevPAR at 87% of 2019 levels.
Over the past 28-day period, 77% of all U.S. markets have been in the “recovery” category, with RevPAR between 80% and 100% of 2019 levels, and the “peak” category, with RevPAR exceeding 2019 levels. Adjusted for inflation, U.S. hotel RevPAR over the 28-day period was 76% of 2019 levels, which puts it in the “recession” category.
This was the third consecutive week that inflation-adjusted RevPAR was less than 80% of 2019 levels. As result, fewer markets (69%) are in the “recovery” or “peak” categories.
Market Highlights
Los Angeles contributed about 10 percentage points to the week-over-week ADR improvement in the top 25 markets. Weekend ADR in the market increased 103% week over week to $348.
Orlando’s hotel market also had an exceptional week, with weekly occupancy up 21 percentage points from the prior week and ADR 17% higher. Weekday occupancy, ahead of the UCA Nationals Cheerleading event in the city, reached 71%. Weekend occupancy was 79%.
With the exception of the Christmas/New Year week, it was Orlando’s highest weekday occupancy since mid-July 2021.
The PGA’s Phoenix Open tournament also lifted performance for host city Phoenix, where weekday hotel occupancy reached nearly 80% — the highest weekday occupancy of any top 25 market.
Tampa, Miami, Phoenix and Los Angeles all reported occupancy above 80% for the weekend. Another five markets, led by Orlando, had weekend occupancy above 70%. The lowest weekend occupancy was in Minneapolis (51%), followed by San Francisco at a similar level.
New York City was the surprise gainer as weekday occupancy increased 11 percentage points, even though weekday occupancy remained low in absolute terms at 49.5%.
All but two top 25 markets — Nashville and New Orleans — reported weekday occupancy gains. Overall, top 25 market occupancy hit 54%, with weekday hotel demand 76% of what it was in the comparable week of 2019. Eighteen of the top 25 markets also reported ADR above 2019 levels, but adjusted for inflation, the number of markets beating 2019 ADR drops to seven.
Outside of the top 25 markets, weekend ADR was up 4.5%. Total weekly U.S. ADR was 101% of what it was in the same week of 2019, marking the first time in six weeks that weekly ADR was above the 2019 level. On an inflation-adjusted basis, weekly ADR was 91% of the 2019 level.
Central business districts also showed a nice bump in weekday occupancy, up 4.9 percentage points to 42%.
The Tampa central business district again led the group followed by Miami. The central business districts in San Diego, Los Angeles, Denver, Dallas and Boston all reported double-digit weekday occupancy gains. Houston’s central business district posted the largest decrease, falling 24 percentage points from the previous week.
Weekday occupancy in Washington, D.C., St. Louis, Chicago, Philadelphia and Minneapolis remained below 30%. While this was a better week for central business districts, demand remained on the low side, with weekday demand only 61% of what it was in 2019.
For the entire week, market-level occupancy ranged from 87% in the Florida Keys to 37% in Myrtle Beach, which should get a boost as the spring break travel season kicks in.
Full-week occupancy growth was led by Orlando and Phoenix, followed by Harrisburg, Pennsylvania; New York City; and San Antonio.
The New York City and San Antonio hotel markets reported their highest weekly occupancy since the holidays, at 54% and 62% respectively. San Antonio benefited from the opening of the annual Stock Show and Rodeo.
Isaac Collazo is VP 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.