October was a nice way to kick off the fourth quarter in terms of U.S. hotel performance, delivering a "solid month" that benefited from good weekday performance and some demand lift.
On the latest episode of Tell Me More: A Hospitality Data Podcast, hosts Isaac Collazo and Jan Freitag unpacked the latest U.S. forecast revision from STR and Tourism Economics, shared October highlights and dove into some seasonal industry topics.
Looking at October, STR's Vice President of Analytics Collazo pointed out that hotel demand in the month increased 2.7% over last year, "the largest advancement since March 2023." That also was the highest demand level recorded in an October, at 117.8 million rooms, surpassing the record set in 2019.
But those gains remain offset by the fact that average daily rate continues to grow below the rate of inflation — a trend the U.S. hotel industry has seen in 16 of the last 19 months.
"What I'm hearing is that top 25 downtown, midweek is where the action is," said Freitag, CoStar Group's national director of hospitality analytics. "The American consumer is feeling the pinch. Weekend [hotel demand] is not as strong as we've seen."
Weekend leisure travel is something Freitag and Collazo said they're keeping an eye on moving forward. That's the segment suffering from lower demand and rates most, compared to business-transient and group segments.
STR and Tourism Economics downgraded their projected ADR and RevPAR gains for 2024 in their latest U.S. hotel forecast revision.
"Right now, I know there's a lot of optimism for 2025, but when I look at the data, when I look at the economic forecast, to me it's just more of the same," Collazo said.
Freitag echoed that while optimism percolates in the industry for further interest rate cuts and benefits of a new administration, it's still early days.
"Tourism Economics upgraded its GDP forecast for 2025 from 2.5% annualized to 2.6% annualized because they expect that the tax cuts will have impact on more spending from the corporations," he said. "I assume that some of this will trickle down into more group and more corporate transient. But we have been underwhelmed, honestly."
Also in this episode
- Freitag shares Bureau of Labor Statistics data showing that compared to 2020, the U.S. hotel industry is missing about 9% of the jobs it had in 2020, while wages are 30% higher than they were in 2020.
- Collazo dives into this year's compressed holiday season, which has five fewer days between Thanksgiving and Christmas than typical, since Thanksgiving was late and Christmas falls on a Wednesday.
Referenced in this episode
- Article: STR, Tourism Economics lower US hotel growth forecast in final revision of 2024
- Article: How a shortened holiday season between Thanksgiving and Christmas could affect US hotels
- Podcast: The labor law changes US hoteliers can expect under a second Trump administration
- Article: As Chinese tourists travel internationally again, their desires have changed