May hotel performance data in the U.S. improved, but it's still no match for the inflation drag.
In the latest episode of "Tell Me More: A Hospitality Data Podcast,” CoStar National Director of Hospitality Analytics Jan Freitag and STR Vice President of Analytics Isaac Collazo dive into the data to find the late-spring/early-summer bright spots.
"For me, the most important thing is that room demand has been up for two months in a row," Collazo said, citing 2% growth in May and 1.8% growth in April.
"May [had] the highest monthly revenue per available growth since March of 2023; it grew 4% after a 1.9% gain in April," Collazo said, adding that most of that growth came in early May. Plus the month had an additional weekend.
Average daily rate also rose in May, up 2.4%, bringing the month's performance in line with STR's latest forecast, which was released in early June.
But hotel ADR continues to trail the rate of inflation in the U.S.
"From that real ADR perspective, we continue to trend downward instead of upward, and we're not getting close, on an inflation-adjusted basis, to the 2019 number," he said.
Freitag said urban hotel RevPAR, up 7% and driven by 3.5% ADR increases, was a particular highlight in May.
"Downtown locations are really having a moment, and hopefully will continue to as we get into the summer with leisure demand, and then hopefully into fall, which is big meeting season," he said.
Freitag shared some specific data about San Francisco, which has been slow to recover hotel demand over the last year.
"In May, RevPAR was up 13% driven up by room rate of 8% [growth]," he said. "Occupancy for May was 71.1%, ... which is pretty healthy."
In May, group ADR reached $330 in San Francisco, while transient ADR was $277.
Collazo said there are still significant gaps between 2019 hotel performance and today.
"In May of 2019, nominal ADR was $242 and in May of 2024, it's $224," he said. "RevPAR in May of 2019 was $204; this year it was $150 or $160, so it's still hard times there."
But in general, Collazo said it's good news that the city has posted positive RevPAR growth in six of the last eight months, though "this is a market that will be in recovery for a much longer period of time," he said.
On the international travel front, outbound travel from the U.S. increased by 11% year over year in May, continuing a strong pace that's been in place for a while, despite worries it might plateau, Collazo said.
"In January, [outbound travel] grew 8.5% year over year. In February, 15%. In March, 14%," he said. "April took a little step back at 5.6%, and then May back up."
All in all, outbound international travel is 20% higher than it was in 2019, Collazo said.
Inbound travel to the U.S., however, is still at a deficit to 2019 levels.
"That's still going to be a significant issue for us," he said.
More From This Episode
Other topics in this episode include:
- U.S. hotel supply continues to be muted, and Freitag and Collazo talk about some contributing factors, such as major hotels going offline.
- Freitag shared hotel transaction volume through June 21 reached $4.6 billion, up from the last quarter but still down from a year ago at this time.
- Collazo and Freitag talk about why economics are the main force behind international inbound and outbound travel trends right now.
- In each episode, speakers share a fun metaphor that illustrates the hotel industry mood at the moment. In this episode, Collazo compares the slow-moving, lazy dog days of summer to industry performance, and Freitag invites listeners to see the industry as a Rorschach test, with multiple meanings gleaned from the same picture.
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