Weekly U.S. hotel performance dipped for a second consecutive week with fewer students and families traveling for spring break, but a closer look at U.S. hotel demand over the past six weeks shows that the biggest deficit to 2019 remains in the top 25 markets and among group business.
In the six weeks ending April 2, the U.S. hotel industry sold 5.2 million fewer room nights than it did at this time in 2019. Not surprising, the largest gap was in the top 25 markets, which accounted for 4.8 million of the 5.2-million-room-night deficit to 2019.
Within the top 25 markets, 76% of the room night decrease was from weekday demand, mostly from large hotels, of 300 or more rooms, where group business accounted for most of the demand deficit. More than 50% of the weekday room-demand decrease came from five markets — Washington, D.C.; New York, Chicago, San Francisco and Los Angeles. Washington, D.C., and New York accounted for 28% of the demand deficit over the past six weeks.
However, over the same six-week period, U.S. hotel revenues were up $1.4 billion, or slightly down when adjusting for inflation.
Despite group business overall dragging down the U.S. hotel industry recovery, there are signs that this segment will soon pick up.
In a recent survey conducted for the U.S. Travel Association, 84% of business travelers expect to attend conferences, conventions or trade shows over the next six months. The USTA Business Travel Index also points to a stronger level of business activity during the second quarter of 2022 relative to the first quarter.
For the week ending April 2, occupancy in the top 25 markets fell 2.5 percentage points week over week to 68%, but two markets reported their highest weekly occupancy since the start of the pandemic — Washington, D.C., at 66.6% and Nashville at 78%. Atlanta also reported its second-highest occupancy of the pandemic-era at 72.2%.
Hotels in central business districts averaged 67% occupancy for the week, a 1.3-percentage-point decline week over week. Despite the decrease, it was the third-highest occupancy level since March 2020. The pandemic-era high for this market type was achieved a week ago at 68.2% occupancy. The Atlanta, Nashville and Washington, D.C., central business districts achieved their highest occupancy since the start of the pandemic at 74.9%, 86.2% and 70.5%, respectively.
Weekday group demand among luxury and upper-upscale hotels was mostly flat over the previous week, but above levels achieved in 2021. The largest weekday market gains for the week were reported in Atlanta and Nashville, with Orlando and San Francisco posting the week’s largest group declines.
Total U.S. hotel occupancy for the week was 64.2%, down 1.4 percentage points from the prior week.
While weekly occupancy has been above 60% for six consecutive weeks — the longest streak since summer 2021 — it has averaged 4.4 percentage points lower than what it was in the comparable six weeks of 2019.
Average daily rate declined for a second consecutive week to $146 — the fourth-highest level on record. Despite being down 2.4% from the previous week, ADR remained 12% above 2019 levels, or flat to 2019 when adjusted for inflation.
Weekday (Monday to Wednesday) and shoulder (Sunday and Thursday) ADR declined 3.1%, while weekend ADR fell 1.3%. ADR in the top 25 markets dropped 1.4%, compared to a decline of 2.9% in all other markets combined. Weekend ADR in the top 25 markets remained relatively strong, up 0.6% from the prior week. Hotels in central business districts reported weekly ADR of $224, up 3.6% from the prior week and the highest level since the start of the pandemic.
Revenue per available room decreased to $94 after reaching a pandemic-era high of $101 two weeks ago.
For the past three weeks, industry RevPAR has been above levels achieved in 2019. Weekly RevPAR was 5% higher than the 2019 comparable. Real (inflation-adjusted) RevPAR, however, was 7% lower than 2019.
Top 25 market RevPAR was down 5% week over week, led by a 6% decrease on weekday and shoulder days. In all other markets, RevPAR was down 4.1%. Central business district RevPAR was $150, the highest of the pandemic era and up 1.7% week over week, but 13% lower than in 2019.
Over the past week, 65% of markets — or 40% when adjusting for inflation – reported RevPAR that was higher than what was achieved in 2019. The number of markets at “peak” RevPAR — higher than 2019 levels — has been elevated for the past three weeks.
Over the past two weeks, there have been no markets in “depression,” with RevPAR below 50% of the 2019 level. San Francisco and San Jose had lingered in that category since the beginning of the pandemic.
Over the past 28 days, 70% of markets — or 37% adjusting for inflation — were at “peak” RevPAR, the most since the Christmas holidays.
In eight markets, weekly occupancy surpassed 80%. All but one of those markets were in Florida, and the Florida Keys had the nation’s highest occupancy at 85%, as it has during 12 of the past 14 weeks. Two weeks ago, during the peak of the spring break travel season, 21 markets reported occupancy above 80%. Even as occupancy tempers down, 46 markets reported levels higher than the comparable week of 2019.
Orlando’s hotel market, the nation’s second-largest market based on room supply, reported 75.4% occupancy for the week, still strong despite being down from the prior week. Orlando’s occupancy has been above 70% in seven of the past eight weeks, reaching a pandemic-era high two weeks earlier. To put it into context, in 2019, occupancy in the market was above 70% in 13 of the first 14 weeks of that year, with the spring-break weeks coming in above 80%.
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.