Advancement in vaccine distribution and burgeoning travel confidence in the U.S. has unleashed pent-up demand for hotels, data from the past two weeks clearly shows.
According to the latest weekly U.S. hotel performance data from STR, CoStar’s hospitality analytics firm, U.S. hotel demand reached 21.8 million room nights sold over the seven-day period ending March 20 — an increase of 3.7 million from the previous two weeks and the highest for any two-week window since late February/early March of 2020.
As a result, U.S. hotel occupancy — on a steady rise since late January — hit yet another pandemic high of 58.9%. Even factoring in hotels temporarily closed due to the pandemic, occupancy was at 55.7%.
Weekend occupancy was even stronger at 71.7%, or 67.6% including temporary closures. Both percentages were the highest in the country since March 2020.
Hotel markets in eight states posted weekend occupancy greater than 80%, and in 10 other states that metric was above 70%. Weekday occupancy was also the best of the past year, surpassing 50%, and up 6.4 points versus the previous week.
Hotel room demand grew in every state during the week of March 20. The largest gains were posted in Florida, Texas, California, Tennessee, Colorado and Nevada, which together accounted for nearly half of the total U.S. demand gains for the week.
Weekly demand in Florida, Texas and California surpassed 2 million rooms nights, with Texas hotels selling more rooms than during the same week in 2019 and during any other week since late July 2019.
Overall U.S. hotel industry demand for the week was 81% of what it was in 2019.
All but three U.S. markets posted week-to-week demand growth, led yet again by the Florida Keys, where occupancy topped 95%. All but one of the top 10 highest weekly occupancy markets were in Florida.
Just outside of the top 10 markets for highest occupancy, San Antonio, Texas, has experienced the largest turnaround of any market over the past six weeks — from 38.1% occupancy in the week of Feb. 6 to 78.1% in the week of March 20, according to total room inventory data from STR which assumes all hotels in the market are open. The upturn began with demand from residents displaced due to the freak winter storm that paralyzed most of Texas and continued last week with the 2021 NCAA Division I Women’s Basketball Tournament in town. The tournament runs through April 4.
U.S. hotel average daily rate also reached a pandemic high, increasing 5.2% week over week, following a 4% gain the previous week. Fifty-six markets reported weekly ADR that was 95% or greater of the levels posted during the same week in 2019. Year over year, U.S. hotel ADR increased 15.8%.
Revenue per available room, another key performance metric, was up 124.5% year over year for the week, due mostly to easier comparisons with the same week in March 2020, when the pandemic impact on the U.S. hotel industry was in effect. For this same reason, RevPAR growth is expected to remain in the strong double-digits for some time to come.
A better measurement of the strength of the U.S. hotel industry recovery is indexing performance against the same week in 2019.
According to STR’s “Market Recovery Monitor,” weekly RevPAR indexed at 69, meaning that absolute RevPAR is 69% of what it was in 2019. Including temporary closures, the index was at 65.
The Market Recovery Monitor places the industry and its markets into one of four categories, based on ratios achieved by dividing current RevPAR performance against performance in the comparable week in 2019. Ratios of 100 or more outperformed the benchmark, and below 100 underperformed. The categories are:
- Depression: Markets with an index of 50 or below against the benchmark 2019 performance;
- Recession: Markets with an index of between 50 and 79.9;
- Recovery: Markets with an index of between 80 and 99.9; and
- Peak: Markets with an index of 100 or higher.
Strengthening demand resulted in an increase in U.S. markets categorized as in “recovery” and fewer markets in the “depression” group.
The markets with the lowest indices continued to be those that have a higher number of large hotels — 300 or more rooms — and are in mostly urban locations, including San Francisco, New York and New Orleans. Seven markets posted weekly RevPAR that was less than 30% of what it was in 2019.
Meanwhile, as a result of strict travel restrictions remaining in place, most global hotel markets outside of the U.S. continued to post depression-level performance, according to STR’s Market Recovery Monitor.
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.