In typical fashion, U.S. hotel demand and occupancy lulled in the week after the Fourth of July holiday, but demand patterns indicate the resurgence of travel and hospitality will continue through the end of summer and into fall.
Next week — the week ending July 23 — will be telling.
Historically, week 30 — July 18-23 this year — produces the highest weekly demand of the year. If demand doesn’t rise, that will be concerning.
In Delta Airlines’ quarterly earnings call, CEO Ed Bastian said bookings are still relatively strong heading into fall and winter as rising inflation and recession fears have yet to derail the pent-up appetite for travel that has been unleashed in recent months. Delta executives said they believe demand from business travelers will step up this fall when summer vacation travel ebbs.
The latest weekly data from STR, CoStar’s hospitality analytics firm, shows U.S. hotel industry occupancy at 63.3% for the week ending July 9, which was the lowest level since early March. For the three-day holiday period, occupancy was 68.7%. A year ago, occupancy reached 71% during the three-day holiday period.
Compared to the prior week, U.S. hotels sold 1.5 million fewer room nights. Occupancy was also down 3.7 percentage points from the comparable week in 2021, marking the first year-over-year decline in the metric since early March 2021.
Since 2000, the Fourth of July or the federal observance of the holiday has fallen on a Monday seven times, and in all but one of those three-day weekends, demand and occupancy both declined from the previous week. The only time both measures have not fallen was last year, when pent-up demand from COVID-19 isolation drove the three-day holiday weekend to the highest level since STR began tracking weekly performance in 2000. This year’s weekly demand decline was the largest of the seven.
Despite the week-over-week decline in demand, U.S. hotels sold more than 11.5 million rooms over the holiday weekend, ranking just below the number of rooms sold in 2016 and 2021 when the Fourth of July also fell on a Monday.
Nominal average daily rate was flat week over week, remaining at $154, which was the sixth-highest level since weekly records began, 9% above a year ago and 16% better than the matching week of 2019. Nominal revenue per available room declined 5.9% to $97, which was 1% below the 2019 level and 3% higher than a year ago.
By day of week, Sunday’s room demand was the second highest of the seven times since 2000 that the Fourth of July was celebrated on a Monday, just behind last year.
As is normal, demand declined on Monday (the Fourth of July) and Tuesday with half of the weekly decrease coming on Monday. Room demand began growing again on Thursday and into the weekend. Weekend occupancy bounced back to 74%.
The demand decrease was widespread with 135 of the 166 STR-defined markets reporting a drop. Most of the decrease, however, was centered in the top 25 markets, which accounted for nearly half of the weekly demand decline as business and group travel came to a halt for the holiday.
Oahu’s hotel market recorded the highest weekly occupancy at 86%, which was a pandemic-era high for the market. Only three markets had occupancy above 80% for the week — Oahu, Alaska and Myrtle Beach.
Among submarkets, Panama City Beach, Florida, reported the highest occupancy at 87.4%, followed by Waikiki at 86.8% and San Diego South/East at 84%. Not surprising, central business districts had some of the lowest occupancies for the week and collectively reached just 59%.
While nominal ADR was flat week over week, it was still at the sixth-highest level since 2000. Twenty-four markets, mostly rural and leisure-focused, reported their highest nominal ADR since weekly tracking began in 2000, including San Diego, Norfolk/Virginia Beach, Orange County (Anaheim) and Harrisburg, Pennsylvania.
At the property level, 44% of reporting hotels had a nominal ADR that was 16% greater over the past two weeks than in the same two weeks of 2019, which is well above the rate of inflation, now around 14%.
Only 15% of hotels had a nominal ADR that was below the level achieved in 2019. Additionally, 50 hotels reported ADR above $1,000 over the past two weeks as compared to only 15 in 2019. Using a straight average, ADR at these 50 hotels has risen by 68% versus the same period in 2019. Adjusted for inflation, ADR remained above 2019 for a fifth consecutive week with real ADR 1% higher than it was three years ago.
Nominal RevPAR was down 1% compared to the same week in 2019. This was only the second of the past 17 weeks when nominal RevPAR was lower than in 2019. Adjusted for inflation, RevPAR was 14% lower than in 2019. A week prior, real RevPAR was 7% higher, but that was mostly due to the shift in the Fourth of July holiday.
Even with the decrease in RevPAR over the past two weeks, 90% of all U.S. hotel markets have achieved “peak” 28-day nominal RevPAR above 2019 levels. Adjusted for inflation, 45% of markets achieved RevPAR above 2019 levels over the past 28 days. The percentage of markets at “peak” RevPAR on a rolling 28-day average has been somewhat stable for the past 10 weeks. Additionally, most other markets have real RevPAR that is in the “recovery” zone, between 80% and 100% of 2019 levels.
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.