A “normal” week, in which comparisons were not skewed by the timing of holidays or religious observances, affirmed just what the new normal is for U.S. hotels this time of year: softer occupancy overall, revenue gains driven by higher rates, and rising demand from business and group travelers.
The third part of that equation is evidenced by stronger occupancy on the weekdays than on the weekend, as well as a larger number of hotel room nights booked at higher-end hotels and in the largest hotel markets.
For the week ending Oct. 21, CoStar data shows the highest occupancies among U.S. markets were in Las Vegas at 89.2%, followed by New York at 89.1% and Boston at 87.7%. The Gatlinburg/Pigeon Forge, Tennessee, and Austin, Texas, markets also posted high occupancies at 82.9% and 82.8%, respectively. Events such as Austin’s Formula One Grand Prix, conventions and seasonal trips were responsible for the high occupancy in those markets.
Groups booked 2.3 million rooms at luxury and upper-upscale hotels, the highest level since the start of the pandemic and just 27,000 rooms shy of the same week in 2019. Year over year, group demand grew 1%, and week over week, it grew 7.9%. Groups paid an average daily rate of $266, up 5.9 percentage points week over week and 1.9 percentage points year over year. The top 25 markets posting the greatest year-over-year group occupancy increases included Seattle, Atlanta, Philadelphia and Oahu. Upper-upscale class hotels, which are most likely to host group events, posted their third-highest room demand since early March 2020.
Meanwhile, total U.S. hotel industry occupancy for the week was 69%, up half a percentage point from the previous week but down a little more than that compared to last year. It marked the third week in a row that occupancy has declined year over year, and that decline is being driven primarily by lower demand for economy hotels. On the upside, ADR increased 3.8%, its fifth consecutive week above 3%, resulting in a 2.9% gain in revenue per available room.
The interplay of strengthening weekday and softening weekend occupancy has been observed all year. Weekend occupancy for the week was down 1 percentage point. Weekdays, meanwhile, were only slightly down in occupancy, a 0.2-percentage-point difference from the same week last year.
Global Performance
Global occupancy excluding the U.S. grew to 71.3%, increasing 2.3 percentage points from the previous week and up 7.6 percentage points from a year ago. ADR also up 9.4% from a year ago but down 2% from the previous week. RevPAR grew 22.5% year over year to $102, continuing a streak of more than 20% growth observed nearly all year. The top 10 countries based on supply continued to post strong performance, with this week’s occupancy attaining 73.8%, up 10.8 percentage points from a year ago. ADR and RevPAR grew 7.9% and 26.3%, respectively.
The United Kingdom led the top 10 in occupancy at 80.6%, down slightly from last year. It marked only the fifth time this year that weekly U.K. hotel occupancy has dropped compared to 2022. Three of the declines can be attributed to the shift in holidays: school Easter break, the additional bank holiday and the Coronation of King Charles. The other two were likely due to storms affecting parts of the country. Despite these slight decreases, ADR continued to grow, leading to an average RevPAR growth of 11% over the past six months.
Isaac Collazo is vice president of analytics at STR. Chris Klauda is senior director of market insights at STR. William Anns is a research analyst 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.