It was hugs all around this week with the Valentine Day calendar shift spreading love to both meeting planners and leisure travelers during the week of Feb. 9-15.
Valentine’s Day landed on a Friday this year compared to Wednesday last year. This gave meeting planners the go-ahead to schedule conferences and conventions during the week while the Valentine’s Day Friday kicked off a long Presidents Day weekend for all love birds, making it a good week all around for the hotel industry.
U.S. hotel revenue per available room increased 3.4%, with average daily rate advancing 2.2% and occupancy up 0.7 percentage points. Weekdays produced the greatest gains with RevPAR up 7.4% followed by the weekend up 6.2%. Shoulder days Sunday and Thursday were down 6.8% due to the Sunday Super Bowl market shift from Las Vegas to New Orleans.
Super Bowl LIX in New Orleans produced hotel occupancy for the three days (Friday – Sunday) of 93.6% for the market. This was the highest occupancy of any Super Bowl topped only by the last Super Bowl in New Orleans which achieved 95.8%. ADR this year reached a record $810 resulting in RevPAR of $758 which was second only to Las Vegas. Hotels in the New Orleans Central Business District were the main attraction with RevPAR of $937, the result of 98% occupancy and ADR of $955. Last year’s Super Bowl in Las Vegas saw $768 RevPAR for the market with ADR at $634 and occupancy of 82.5%.
As mentioned last week, the impact of Super Bowl in New Orleans as compared to last year’s Super Bowl in Las Vegas had a lopsided impact on weekly hotel performance due to Las Vegas being a much larger market than New Orleans and this carried over into this week. At the start of the week, the Super Bowl lifted the host city New Orleans (+33.5% RevPAR for the week).
The impact of Super Bowl was complicated by the fact that New Orleans celebrated Mardi Gras this week last year. Super Bowl Sunday in New Orleans produced a hotel RevPAR increase of 216.4% with the following two days posting negative RevPAR affected by the Mardi Gras comparison last year. Las Vegas experienced a 35.5% RevPAR drop for the week with an 81.3% drop on Sunday. Excluding these two markets, RevPAR this week advanced a healthy 6.2%, the result of ADR up 4.4% and occupancy gaining 1 percentage point.
A very good week for the top 25 markets
The top 25 U.S. hotel markets experienced the strongest performance with 19 of 25 markets posting gains. Excluding the two Super Bowl markets, ADR increased 5.7% while occupancy rose 2.7 percentage points producing a 10.1% RevPAR increase. Weekdays produced the largest increase at 13% followed by weekends (+11.0%) and shoulder days (3.6%).
Chicago, Philadelphia and San Fransisco hotels all posted RevPAR gains in excess of 25%. Chicago RevPAR was high all week while Philadelphia produced the greatest gain on Thursday ahead of the Philadelphia Eagles Super Bowl victory parade on Friday. San Francisco, which hosted the NBA All-Star Game, saw the greatest RevPAR gains over the weekend. The rest of the country produced solid RevPAR gains during the weekday and weekend periods while the shoulder days declined.
Strong group performance lifted hotels across the country
Group demand in luxury and upper-upscale hotels increased 14.7% year over year. Demand rose 16.3% across the top 25 markets with 22 of the 25 markets posting positive year-over-year gains.
Across the rest of the country, hotel group demand increased 6.2%. The importance of Valentine’s Day and the impact of the shift from Wednesday to Friday was highlighted by weekday group demand, which increased 31.2% year over year. Group ADR for the week increased 2.4%. Las Vegas had an outsized impact on ADR. Excluding this market, group ADR increased 5.9%.
Hurricane impact remains as fire impact slows
The 13 hotel markets in the southeast U.S. affected by Hurricane Helene and Hurricane Milton continue to see elevated performance with RevPAR up 15.6% this week which is similar to the growth in the previous two weeks. Occupancy gains are holding at around 6 percentage points with ADR increasing about 6%.
The impact from the California wildfires that began in early January appears to be receding. Hotels in the greater Los Angeles market – Los Angeles, Orange County, California Central Coast, Inland Empire – has seen slowing RevPAR gains from 1.6% this week to 5.1% last week and 8.6% the previous week, indicating a return to normal trading patterns across the greater area.
Three areas in the Los Angeles market continue to see elevated occupancy increases: Pasadena/Glendale/Burbank (+12.5 percentage points), Los Angeles East (+8.4 percentage points), and Los Angeles North (+4.9 percentage points). However, these increases have also started to shrink over the past weeks since the fire. The declines seen in the Hollywood/Beverly Hills submarket since the fire also continue to shrink with occupancy down 2.5 percentage points year over year compared to down 4.9 percentage points the previous week and down 10 percentage points the week before that.
Chain-scale bifurcation is alive and well
Bifurcation returned to hotel chain-scale performance with RevPAR growth ranging from up 11.6% among luxury hotels to up 0.9% for economy hotels. Occupancy growth drove RevPAR gains in upper-upscale and upscale hotels, whereas ADR was the primary driver in the bottom three chains scales. Luxury hotels saw even increases in occupancy and ADR. The lingering impact of Hurricane Helene and Hurricane Milton have affected hotel performance almost exclusively in the lower tiers. Excluding the 13 hurricane markets, chain-scale bifurcation is even more pronounced with RevPAR ranging from luxury at 12.3% to economy down 2%.
What to expect in the weeks ahead
Next week’s U.S. hotel results should be relatively flat. The Presidents Day holiday on Monday, Feb. 17, will slow business and conference travel; however, the holiday occurred at the same time last year so the comparison will be clean. Spring holidays provide the next wrinkle in predicting travel patterns with Easter occurring later this year in addition to overlapping with Passover, which was not the case last year. This compression of the two observances should benefit conference and group travel as only one week will be off-limits to planners – unlike last year when the two observances were separate from each other.
Calendar shift of Chinese New Year depressed global demand
Global demand, excluding the U.S., declined 3.5% driven by China and the shift of Chinese New Year that concluded on Feb. 12. Last year, Chinese New Year began on Feb. 10. Excluding China, Global demand rose 2%, resulting in occupancy of 65.8%, the highest level of the year. Countries seeing double-digit demand growth this week included Indonesia, the Netherlands, Belgium and Germany.
Among the top 10 largest countries based on hotel supply, RevPAR percentage changes ranged from up 21.3% in Mexico to down 49.9% in China. Five of the 10 countries saw double-digit growth this week with ADR being the primary driver. Indonesia was the one exception where strong occupancy growth offset an ADR decline.
Looking ahead, the rest of the world will see difficult comps next week given that Chinese New Year was a week later last year.
Chris Klauda is senior director of market insights 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.