Fall is officially in full swing and so is conference season for hoteliers.
In the week ending Sept. 21, U.S. hotels saw revenue per available room rise 2.5% with the bulk of the increase coming from average daily rate, which rose 2%. More than 60% of the hotel industry’s weekly demand gain came from the top 25 U.S. hotel markets, where RevPAR increased 3.1% on a slightly higher gain in ADR (+1.9%) than occupancy (+1.2%). RevPAR in all other markets also grew 2% via ADR. U.S. hotel occupancy increased to 68.9%, its first time above 68% since early-August.
A shift in two major conferences had a significant hotel performance impact in the top 25 markets. San Francisco, which hosted Salesforce’s Dreamforce conference, saw RevPAR rise 71.6%. The conference was a week later this year.
New York City hotels saw RevPAR fall 14.5% due to the shift in the United Nations’ General Assembly “High-level Week,” which is a week later this year. Sunday through Thursday were responsible for New York City’s 24.4% RevPAR decline. Weekend RevPAR in New York City increased 20.3% as the UN event began to ramp up.
Excluding both San Francisco and New York City, the remaining 23 major U.S. hotel markets saw even stronger RevPAR growth of 4.2%. The total U.S. hotel industry would have seen 2.9% RevPAR growth even without those two markets.
Hotel room demand increased 0.9% – equal to 253,000 room nights – year over year after falling in the previous two weeks. Weekends (Friday & Saturday) accounted for most of the gain (43%) followed by weekdays (Monday through Wednesday), which made up 39% of the industry’s demand growth.
It is interesting that weekends and weekdays took different paths to hotel demand growth. Weekend demand growth was led by non-top 25 hotel markets, which contributed 84% of the gain in room nights. RevPAR in those markets increased 2.6% with hotel occupancy of 73.6%, up 0.9 percentage points. Oklahoma City – with the Tennessee and Oklahoma football game in Norman – led the nation with weekend hotel RevPAR rising by more than 100%. Other markets with gridiron gains included Columbus, Ohio, and Raleigh/Durham/Chapel Hill in North Carolina. While not contributing much to new demand, top 25 weekend performance was also good as RevPAR increased 2% with flat occupancy (79.4%).
Weekdays belonged to the top 25 markets, which accounted for 93% of growth. Weekday hotel occupancy in the top 25 hit 77% with RevPAR growing 4.1%. Houston; Orlando, Florida; Boston; and Los Angeles all saw double-digit RevPAR gains during the weekdays, which also led to double-digit growth for the full week. Overall, 17 of the top 25 markets saw weekly RevPAR gains.
ADR was also the primary driver across the chain scales
Nearly all chains scale saw RevPAR gains except for the economy hotel segment, which fell 0.4% — its lowest decrease of the past four weeks. ADR drove RevPAR gains in four chain scales – upper upscale, upscale, upper midscale and midscale – with RevPAR ranging from up 2.9% in upper upscale to up 1.3% in midscale. Luxury hotels increased RevPAR by 1.5% due to occupancy gains (+2.9 percentage points) while ADR declined 2.5%.
Not surprisingly, upper-upscale hotels saw the largest weekday RevPAR increase at 4.6% with occupancy at 81.8%. Upscale weekday occupancy was also strong (81%) with RevPAR advancing 2.5%. Upscale chains also did well on the weekend with an occupancy level just a bit higher than on weekdays (81.1%). However, in terms of RevPAR, weekday RevPAR growth was highest in luxury (+10.5%) because ADR rose 7.5%.
Record-high group demand
Group demand for luxury and upscale hotels increased 3.7% year over year, reaching 2.4 million rooms, the highest level since fall 2019. Group ADR increased 1.8%.
Some of this growth was due to the conference calendar shift in San Francisco with group occupancy up 14.8 percentage points. That was partially muted by the shift in New York City where group occupancy declined 5.1 percentage points. Next week, U.S. hotel performance data will provide a clearer view of group performance as we move into peak meetings and events season. Weekly transient demand was up 1.5% along with ADR up 1.1%. The top 25 U.S. hotel markets drove this positive transient demand while the rest of the country remained flat year over year.
Looking ahead
U.S. hotels performed as expected with a lift from the Dreamforce calendar shift in San Francisco. As shown in Forward STAR data, the next batch of data is expected to be even stronger with a significant lift from New York City due to the U.N. General Assembly meeting. We expect the overall month of September to be weak as it has one less weekend compared to last year.
Early October will also be soft as the Rosh Hashana observance begins on the evening of Wednesday, Oct. 2, which will affect business and group travel.
Holiday calendar shifts in Mexico, Germany and China affected global performance
Global hotel RevPAR rose 5.9%, driven entirely by ADR, which jumped 8.6%. While occupancy declined 1.8 percentage points, it remained strong at 70.5%. RevPAR in the top 10 largest countries, based on supply, advanced much slower with RevPAR up 2% due to a sharper occupancy decline. The largest decline was in China, where RevPAR fell 15.6%. Hotel performance in China suffered due to the shift in the Mid-Autumn Festival via a 9.7-percentage-point occupancy fall.
Shifting festival dates also caused a drop in Germany, where hotel RevPAR fell 9.3%. The shift in Oktoberfest, which began on Sept. 21 this year compared to the earlier start of Sept. 16 last year led to a 9% ADR decline. Key markets such as Munich and Berlin felt the most impact, with ADR falling by 32.1% and 14.8%, respectively.
Mexico continued significant ADR growth (+25%), resulting in a 23.2% RevPAR gain. Most markets posted RevPAR gains, with the largest in Mexico City (+51%), the result of the numerous celebrations for the Grito de Dolores.
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.