In the clearest picture yet of the fall travel season and hotel demand, performance data for the week after Labor Day shows the top 25 U.S. hotel markets achieved their second-highest weekday hotel occupancy and highest average daily rate this year.
Weekday hotel occupancy in metropolitan markets is a proxy for business travel, which along with group travel continues to recover to pre-pandemic levels.
STR, CoStar’s hospitality analytics firm, gauges business travel demand for hotels by analyzing midweek — Monday to Wednesday — occupancy and room nights sold at full-service hotels in the luxury and upper-upscale segments. For the week ending Sept. 16, those hotels also achieved their highest midweek occupancies of the year at 75.9% and 80.2%, respectively. The number of rooms sold to groups in those segments declined 4.5% compared to the same week last year. However, the metric increased 59% compared to last week, which is in line with expectations for growing group demand. Weekday group demand topped 2.1 million for only the third time this year.
Top 25 market weekday occupancy for the week was 76.1%, up 0.9% year over year. So far, the highest weekday occupancy of 2023 was 76.4%, which was achieved in the week ending June 17. Weekday ADR in those markets increased 8.8% to $211.
It was the second time this year that weekday ADR surpassed $200 in the top 25 markets. The boost from weekday ADR, along with increased occupancy, resulted in top 25 weekday revenue per available room increasing 10.1%. Top 25 weekend ADR fell 7.2% with RevPAR falling 12.0%.
Weekend performance was lower in the top 25 markets and nationally, illustrating the shift from summer’s heavy leisure travel to fall’s reliance on business, group and convention travelers.
US Performance
Total U.S. hotel industry occupancy was 67.7%, both helped and hindered by calendar shifts. Occupancy showed a significant week-over-week increase, up 7.4 percentage points from the period that included the Labor Day holiday. At the same time, occupancy was down 1.5 percentage points compared to the same week last year due to the shift of the Rosh Hashanah observance, which in 2022 occurred a week later.
Total U.S. average daily rate increased 7% from last week and 2.3% year over year to $161. This was the first weekly gain above 2% of the past four weeks. RevPAR increased week over week to 20.1%, helped by the significant occupancy boost, while remaining flat year over year at $109.
Four top 25 markets — New York City, Boston, San Francisco and Seattle — reported weekday occupancy above 90%, which points to continuing recovery in groups/meetings and business travel.
Global Performance
Global occupancy excluding the U.S. grew 2.6 percentage points week over week to 70.9%, which was 5.7 percentage points higher than a year ago. ADR increased 10.8% to $150, with RevPAR up 20.4% to $106. Occupancy for the top 10 countries based on supply rose 2.9 percentage points week over week to 72.6% and 7.9% year over year. ADR was up 4.8% year over year to $140, and RevPAR increased 17.6% to $101.
Across the top 10 countries, the largest occupancy growth was in Asia. In most European countries, hotel performance ranged from declines to modest growth. In the Americas, Canada and Mexico both experienced declines. The United Kingdom maintained the highest occupancy level of the top 10 countries, up 2.3 percentage points year over year to 85.7%. Occupancy declined for the second week in a row in Italy and France. China, Indonesia and Japan saw the largest occupancy growth, up 6.6 percentage points, with each posting strong RevPAR gains of 35% year over year.
Chris Klauda is senior director of market insights at STR. Isaac Collazo is vice president of 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.