As we get closer to the holidays, hotel occupancy begins to slow, and this year was no exception.
U.S. occupancy for the week of Dec. 11-17 fell to 54.5% from 59.6% in the prior week. The decrease fell in line with expectations based on prior years. All days of the week saw a week-over-week decrease with Tuesday through Thursday seeing the largest declines, when occupancy fell 6.5 percentage points and the remainder of days occupancy dropped by an average of 4 percentage points.
While a rise in occupancy this week was possible, there wasn’t much of a disappointment given historical trends — optimism replaced what the data was showing. Using just data based on past performance, the next three weeks will be a roller coaster as week 52 will see a large week-on-week decline in demand of around 24% followed by a moderate increase of about 15% in week 53 to end the year. Demand in the first week of 2023 — Jan. 1-7 — is predicted to fall steeply before rising again in week 2. These are all normal seasonal patterns for the industry.
Nominal average daily rate declined 6.8% week over week to $135, up 10.3% from a year ago and up 24% versus 2019. Nominal revenue per available room fell 14.7% week over week to $74, which was 12% higher than in 2021 and 35% greater than 2019. Real, inflation-adjusted ADR and RevPAR were above 2019, something not seen over the previous two weeks. All performance numbers are elevated versus 2019 as week 51 of that year had more of the Christmas impact than this year.
Despite the seasonal slowing, demand for the week was strong and the highest for the 51st week of the past 23 years with room nights sold reaching 21.1 million, up from 20.7 million a year ago. For the first time this year and since the start of the pandemic, weekly occupancy was also at its highest level for this specific week since weekly reporting began. The previous high for this week was seen in 2016, when occupancy was 54.2%, with last year’s occupancy level at 53.7%.
Remember, 2022 is somewhat special as it has 53 full weeks versus 52 and less of a Christmas impact. This year is most like 2005 and 2011 in terms of years with the same starting weekday and equal number of days. For comparison, 2019 had 52 full weeks. More than a third of markets reported their highest room demand for week 51 since the start of weekly reporting with nearly a quarter of markets also seeing their highest occupancy for week 51.
Market Highlights
New York City had the highest weekly occupancy among U.S. markets again this week at 82.9%. Of the 10 highest occupancy markets this week, six were in Florida led by Fort Myers, which continued see elevated demand post-Hurricane Ian, as well as Palm Beach and Fort Lauderdale. Oahu, Hawaii; Fort Worth/Arlington, Texas; and Phoenix completed the remainder of the high occupancy markets for the week. Overall, 34 of the 166 STR-defined U.S. markets showed weekly occupancy above 60%.
With the year winding down, weekdays — or Monday to Wednesday nights — saw a sharp occupancy decline with the top 25 markets falling 7.5 percentage points week over week but up 6.4 percentage points from a year ago. Given the shift in the calendar, top 25 market occupancy was well above 2019 for only the sixth time since the start of the pandemic with five of the six occurrences happening this year. That was in part due to the calendar differences between the two years.
New York City led the top 25 markets in weekday occupancy at 81.7% as well and was second among all markets behind Fort Myers. Phoenix was the only other top 25 market to surpass 70% in weekday occupancy as most were in the 60s. Despite the lower absolute level, most top 25 markets had higher occupancy as compared to 2019 given the calendar shift.
Nationwide weekend occupancy on Friday and Saturday fell four percentage points week over week and was down 1.6 percentage points year over year but up strongly against 2019. New York City reported the nation’s highest weekend occupancy at 89.5%, which equaled the level seen in 2019. New York was followed by Gatlinburg/Pigeon Forge, Tennessee; Fort Myers, and Jacksonville, Florida, where weekend occupancy was above 80%. Orlando, the nation’s second largest market, also saw solid weekend occupancy at 76.6%, down one percentage point versus a year ago.
Chain-scale occupancy ranged from 61.4% in upscale to 47.3% in midscale. Both luxury and upper upscale were above 58% for the week. Looking back over time, occupancy in upper midscale, midscale and economy was the second highest behind 2021. The remaining segments saw occupancy among the five highest ever for the week.
Nominal ADR increased the most week over week in skiing areas including the broad markets of Utah Area, up 20.3%; Colorado Area, up 18.3%; and Wyoming, which was up 13.6%. As compared with 2021, ADR was down more than 3.5% in the final two of that group but up in Utah Area. Eighty percent of all markets saw week-over-week ADR decrease, however, 92% reported year-over-year growth and nearly every market had ADR above 2019. Real ADR was above 2019 in 72% of all markets.
Nominal ADR fell the most on weekdays — down 7.8% week over week — and the least on the weekend, when it was down 5.7% week over week. As compared with last year, ADR was up the most on weekdays — up 13.6% year over year — and on shoulder days Sunday and Thursday, when it increased 10.3% year over year. Fort Myers saw the largest year-over-year weekday ADR increase at 51% followed by Washington, D.C., at 45.6%. The majority of the top 25 markets reported year-over-year weekday ADR gains of greater than 10% with seven seeing greater than 20% gains, including New York City, New Orleans, San Francisco, and Seattle. Real weekday ADR was also above 2019 for most the top 25 markets.
Nominal RevPAR was also up the most in Colorado Area (24%) and Utah Area (22%), but both markets were down compared to 2021. With occupancy and ADR mostly down, it’s not surprising that 88% of markets saw RevPAR fall week over week. And like the other two metrics, RevPAR was up year over year with nearly every market above 2019 and most markets with real RevPAR above 2019.
Over the past 28 days, 55% of markets had real RevPAR above 2019 with 42% in STR’s “recovery” category as real RevPAR was between 80% and 100% of 2019. Only four markets — San Jose, California; San Francisco; Oakland, California; and the New Jersey Shore, New Jersey — were in the “recession” category with real RevPAR between 50% and 80% of 2019.
The Market Recovery Monitor will be off for the holidays during the final weeks of December. The next and final edition of the MRM is scheduled to run on Jan. 6. Beginning Jan. 13, the MRM will be replaced by a new series, “STR Weekly Insights.” This will be one of the final weekly analyses to utilize STR’s current non-participant modeling methodology and U.S. top 25 markets. In 2023, Las Vegas will replace Norfolk/Virginia Beach in the top 25. Read more here.
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.