This year is ending on a healthy and normal note for the U.S. hotel industry, according to hotel industry analysts.
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 wrap up 2023 with commentary on November hotel performance and a look back at the year.
Collazo offered up a new word to replace “normalization” as the descriptor of industry performance smoothing into more regular patterns.
“It’s equilibrium,” he said. “Everything’s getting back to equilibrium. Everything’s getting back to its state of regular performance. November really seemed to me just what it should be.”
Freitag shared that preliminary November hotel revenue per available room for U.S. hotels was up 2.7%, driven by room rate, which was up 3.8%.
While that does bake in some slight occupancy declines — Freitag reminded listeners that supply growth is flat right now — he said there’s no reason for concern.
“RevPAR growth of 3% is a good, healthy sort of normal, steady-state performance,” he said.
Year in Review
In this episode, Freitag and Collazo also revisit their initial expectations for 2023 to see how they stacked up.
Back in January, the duo expected a recession in 2023 because that's what most indicators were showing. Still, nearly 12 months later, they're happy it didn't pan out.
And in January, international travel was still a "wild card," they anticipated. It was surprising to see "the magnitude of that impact," Collazo said.
But the hits outweighed the misses, Freitag said.
"One thing we got really right is that we suggested there would be mix shift on the upper end, that the 100% leisure travel demand that drove luxury and upper-upscale [performance] would be partially substituted with pre-negotiated group rate and corporate negotiated rates ... which would lead to an ADR decline on the luxury side, and that was spot-on. That mix shift absolutely happened," he said.
Freitag said what surprised him in 2023 was that the "wall of distress" in terms of hotel assets did not materialize.
"The other piece that I clearly didn't expect was the Choice-Wyndham conversation," he said.
"Agreed," Collazo added.
More From This Episode
Other discussion topics in the episode include:
- New York City's continuing roll: Average daily rate grew 8.6% in November to $333 and occupancy hit 84%, according to preliminary CoStar data.
- Holiday calendar shifts: What U.S. hoteliers might expect from this year's slightly longer period between Thanksgiving and Christmas, and Christmas Day and New Year's Day falling on Mondays.
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