NFL playoff games, primary elections and other events boosted hotel revenues in some markets, but U.S. hotel performance overall was down for the week ending Jan. 20.
U.S. hotel occupancy for the week came in at 52.2%, down 1.1 percentage points from the previous week. That dip was expected due to Martin Luther King Jr. Day, which traditionally is not a travel holiday and mutes business-transient demand for hotels.
A 2.1-percentage-point occupancy decline year over year was not anticipated, but can be attributed in part to the severe winter weather that affected most of the country during the week.
Despite weaker occupancy, average daily rate was up 1.6% year over year, but that gain was insufficient to lift revenue per available room, which dropped 2.2%.
Over the next several weeks, U.S. hotel performance is expected to steadily improve as business and group travel return, reaching a seasonal peak in mid-March.
Meanwhile, global markets will begin to stabilize following last year’s strong performance as the impact of COVID-19 comparisons wanes.
US Performance Highlights
ADR has grown in every week but two over the past two years and is expected to increase at or above the rate of inflation in every quarter of the year, something that did not happen in 2023.
Performance was generally better in the top 25 markets as RevPAR was down 1% year over year versus 3.3% in the remaining markets. Occupancy drove the top 25 with the measure falling 1.1 percentage points compared to 2.6 percentage points in all other markets. ADR growth, however, was weaker in the top 25, up 0.8% versus 1.8% in the rest of the country.
Weaker performance in the Las Vegas market had a significant impact on the top 25 metrics. Excluding Las Vegas, top 25 occupancy was down only 0.2 percentage points year over year and ADR gained 1.8%, resulting in a RevPAR increase of 1.4%.
Following a week buoyed by the Consumer Electronics Show, Las Vegas hotel demand retreated. The weaker footing is partly due to a calendar shift in the SHOT (Shooting, Hunting, Outdoor Trade) show, which is a week later this year. Also, Las Vegas has more supply in the market with the ramping up of its newest hotel, Fontainebleau, which opened in mid-December. These two factors among others led to Las Vegas hotels posting the largest RevPAR decrease among the top 25 markets, dropping 19.2% due to occupancy being down 9.9 percentage points and ADR down 6.8%.
Top 25 markets posting double-digit RevPAR gains were Atlanta, up 18.3%; and Detroit and Dallas, up 17% and 14.1% respectively as both hosted NFL playoff games.
Nashville hotel RevPAR for the week decreased 15.2%, the largest decline behind Las Vegas. The city came to halt after receiving its annual snowfall in a single day followed by single-digit temperatures that paralyzed the city and resulted in numerous airline cancellations.
Outside of the top 25, the Des Moines and New Hampshire markets were boosted by their respective primary elections to double-digit RevPAR gains along with Portland, Oregon; Colorado Area; Syracuse and eight other markets. Portland was a market that saw higher performance due to winter weather in the Northwest. Most other markets affected by the winter weather saw a negative impact, including Gatlinburg/Pigeon Forge, Arkansas Area and Memphis.
Global Performance
Outside of the U.S., China posted the highest RevPAR gain (+56%) of the 10 largest countries based on supply. Next on the growth list was Japan (+35%), Indonesia (+18%) and Germany (+14%). France and Mexico were the only two top 10 countries to report decreasing RevPAR (-0.8% and -6.1%, respectively). Mexico’s decrease was driven primarily by decreasing ADR, particularly in Mexican Caribbean and Baja California markets. While Canada saw RevPAR growth of 1.3% via ADR, occupancy was down 0.9 percentage points.
Dubai recorded the highest occupancy at 82.9% as the peak leisure season continues to keep pace with last year, assisted by events such as Ed Sheeran’s back-to-back concerts on Friday and Saturday night at the Sevens Stadium. ADR for the city was $193, up 4.5% year over year.
Beijing hotels posted by far the largest year-over-year occupancy gain, up 46 percentage points to 78.9%. This is largely due to timing of the city reopening in 2023 from COVID-19 restrictions, which will continue to affect comparisons for the next few weeks alongside the calendar shift of Chinese New Year. Comparing the same week to 2019, occupancy was down 2.9 percentage points. ADR across the city was up 3.9% to $77. The upcoming Chinese New Year in February bodes well for continued strong performance.
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.