U.S. hotel demand for the week ending Aug. 27 was the highest ever recorded for that specific week, despite the seasonal slowdown as summer gives way to fall.
The week-over-week decline in hotel demand — the number of room nights sold — has continued to be less steep than in previous years. One explanation for that in the latest weekly data from CoStar hospitality analytics firm STR is an increase in hotel demand in the U.S. top 25 markets and from groups on the weekdays.
U.S. hotels sold just as many rooms during this week in 2019, but that was easier to do because that was the week ahead of the Labor Day holiday. Comparisons with 2019 performance are expected to be tougher over the next two weeks due to the timing of Labor Day and in several markets due to the landfall of Hurricane Dorian that year.
Demand declined 3.4% from the previous week as the hotel industry sold 898,000 fewer room nights. In 2011, a year with the same calendar composition of 2022, the demand decline over the two-week period was 6.8%. Excluding 2020, the average weekly demand decrease for this specific week over the past 21 years has averaged 6.1%, or down roughly 1.4 million room nights.
Weekly occupancy was 65%, which was 1.7 percentage points lower than in the comparable week of 2019, but U.S. hotel supply is up 2.6% since then.
Nominal average daily rate decreased 2.6% week over week to $147 but was 15% higher than in 2019 and 11% higher than a year ago. Nominal revenue per available room fell 5.9% week over week to $96, which was 12% greater than in 2019 and 18% higher than a year ago. Real ADR — adjusted for inflation — was 1% lower than in 2019, whereas real RevPAR was 3% lower than in 2019 and unchanged from the prior week.
The increase in group demand for hotels Monday to Wednesday is evidence of a strong fall conference season, which STR’s hotel clients have been touting anecdotally.
Weekday group demand among luxury and upper-upscale hotels was up 10% week over week and reached the third highest overall volume since 2000, behind 2016 and 2019.
In the top 25 markets, group demand achieved a similar ranking and increased 14% week over week. Weekday group demand increased in 17 of the top 25 markets, including Atlanta, Dallas, Orlando, New York, San Diego and San Francisco.
Weekday occupancy in the top 25 markets increased for the first time in six weeks to 67.9%, which is 0.8 percentage points higher than the previous week. The metric was up in 11 of the top 25 markets, including Atlanta, Boston, Chicago, Houston and Philadelphia.
At 81%, Boston had the highest weekday occupancy among the top 25 markets. Weekday occupancy for convention and conference hotels in the top 25 increased 5.4% week over week.
Within the top 25 markets, luxury hotel occupancy was up 3% week over week, compared to a 2% increase at upscale hotels and a 5% hike across the upper-upscale chain scale. All other hotel chain scales reported weekly declines in the top 25.
Weekday demand in urban, upper-upscale hotels with 300 rooms or more increased 9% week over week.
For the entire week, top 25 market occupancy fell 0.6 percentage points due to a 1.9% week over week decrease on shoulder days (Sunday and Thursday) as well as a 2.7% decline on the weekend (Friday and Saturday).
Top 25 weekend occupancy continued to be higher than at the same time last year but was just 94% of 2019’s volume.
Weekends also represented the largest week-over-week decline in demand for hotels outside of the top 25 markets, falling 5.1%. The week-over-week decreases remain consistent with previous years given the start of K-12 schools. According to STR’s 2022-23 School Break Report, 73% of schools had resumed classes as of the week of Aug. 27.
Hotel occupancy in central business districts increased 1.2 percentage points week over week to 67.5%. Weekday occupancy was up 3.5 percentage points, while weekend occupancy dropped 1.7 percentage points. Shoulder days were up slightly.
Occupancy was above 70% in 10 of the 20 central business district markets, with Atlanta leading the way at 86.1% occupancy. Austin, Boston and Denver central business districts reported weekday occupancy topping 80%.
Among the central business districts, the lowest weekday occupancy was reported in New Orleans at 33%, which was the market’s lowest level since early in the year. In fact, the entire New Orleans market had the lowest occupancy of any STR-defined U.S. market at 45%. Even at its low level, weekly occupancy for the market has been slightly better than a year ago but well below 2019.
At $147, nominal ADR was below $150 for the first time in 12 weeks. The decrease in nominal ADR came mainly from markets outside of the top 25, where the metric fell 3.7% week over week. Nominal ADR in the top 25 markets was down by only 1% week over week. Outside of the top 25 markets, the largest decline occurred over the weekend, down 5% week over week.
Weekday nominal ADR among the top 25 markets was down 0.6%. By chain scale, the largest weekday drop was in luxury hotels, where nominal ADR fell 3.6% week over week. Upper-upscale hotels, which benefited by the gain in group travel, reported a nominal ADR decrease 0.7% week over week. Group ADR among those hotels was down 1.2%.
Nominal RevPAR remained well ahead of 2019 in nearly all the 166 STR-defined U.S. markets for the week and in the past 28 days. Real RevPAR, however, was ahead of 2019 in just 71 markets for the week and for the past 28 days. Another 87 markets were in “recovery,” with real RevPAR between 80% and 100% of 2019 levels over the past 28 days. Only eight markets were in “recession,” with real RevPAR between 50% and 80% of the 2019 level. This was slightly less than a week prior.
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.