As summer fades into fall, family travel is slowing, college students are returning to campus, group events are strengthening, and business travel appears to be returning based on weekday trends.

All of these factors point to a normalization of travel as the hotel industry rebalances and returns to typical seasonal patterns. Preliminary data suggests that August will show a slight increase in the number of rooms sold year over year. If it happens, it will be the first monthly growth in demand since March.

After the week of Labor Day, the hotel industry will get a better view of the remainder of the year. Post-Labor Day performance will show the strength of the fall group season as well as the sustainability of weekday demand growth — all indicators of the recovery of business travel.

Heading into the final days of August, U.S. hotel occupancy during the week of Aug. 20-26 was 65%, lower for a fifth consecutive week and in line with normal seasonal patterns. The measure was up 0.3 percentage points from a year ago but 4.9 percentage points lower than the 2019 comparable—similar to the previous four weeks. Occupancy is still expected to trend down for the next two weeks and then grow as group/conference travel climbs to its annual peak. Revenue per available room (RevPAR) increased 2.1% year over year to $98, driven by a 1.7% increase in average daily rate (ADR) to $150. This was the second week of ADR gains below 2%, which can be attributed to changing mix and rebalancing of demand. Real inflation-adjusted ADR remained just under the 2019 level.

The strength of weekday occupancy from Monday to Wednesday continued, increasing 0.9 percentage points year over year. Compared to weekend and shoulder periods, weekdays have produced better occupancy in all but seven of the 34 weeks this year. Shoulder days (Sunday and Thursday) for this most recent week increased 0.2% year over year, while weekends (Friday and Saturday) declined 0.6 percentage points year over year. Weekends have shown an occupancy drop in 22 of the past 34 weeks.

The top 25 markets continued to post stronger occupancy growth compared to the rest of the country, rising 0.8 percentage points year over year to 68.5%. In all but two of the 34 weeks of 2023, the top 25 markets have reported greater occupancy gains than the rest of the country. RevPAR in the top 25 markets increased 2.9%, led by a 1.7% ADR increase. Occupancy outside of the top 25 was 63.1%, which was flat from last year. ADR rose 1.5%, resulting in a 1.5% RevPAR gain.

The growth of weekday demand this summer improved performance across most of the top 25 markets, and occupancy on the books for fall remains above last year’s levels, suggesting it will continue.

The nation’s highest occupancy for the fourth consecutive week was in Alaska at 89.7%, followed by Portland, Maine, at 84.3%. Rounding out the top five markets were Oahu at 84% occupancy, Syracuse at 82.8% and New York City at 82%.

Alaska’s strong occupancy performance – which rose 2.5 percentage points year over year – came from a combination of peak cruise and leisure travel season.

Portland is also in its high season although its occupancy was 6.7 percentage points lower than a year ago. The devastating wildfire on Maui continues to have an impact on hotel performance. Room demand, or room nights sold, were down 17.2% year over year on Maui, while Oahu occupancy remained above 80% due in part to housing displaced residents.

Occupancy in Syracuse rose to 82.8% – up 0.9 percentage points year over year – its highest since March 2020 with a lift from the New York State Fair and Syracuse University’s move-in. Over half of U.S. college students returned to campus during the week, according to STR’s School Break Report, and the impact of college move-ins was felt in college towns across the U.S.

New York City was the only other top 25 market, besides Oahu, recording occupancy above 80%. New York occupancy increased 3.9 percentage points year over year and ADR was up 8.6%, resulting in the third highest RevPAR increase across all top 25 markets. Weekday and shoulder periods produced the highest RevPAR increases.

Of all the top 25 markets, Houston and Las Vegas posted the largest RevPAR increases at 17.8% and 17.1%, respectively. Houston’s growth was led by strong weekday performance with weekday occupancy up 8 percentage points and weekday ADR increasing 18%.

Group demand among luxury and upper-upscale hotels, which is generally slow during this time of year, increased 3.6% compared to the same week last year. Over the past six weeks, group demand was up 1.7% compared to the same four weeks last year.

Global occupancy excluding the U.S. softened for a second consecutive week to 71.3%, down 1.1 percentage points from the previous week but up 5.5 percentage points year over year. ADR increased 12% to $149, resulting in a 21.3% gain in RevPAR to $106.

Occupancy for the top 10 countries, based on supply, increased 7.3 percentage points year over year to 73.2%. Top 10 ADR rose 7.8% year over year to $137, which was $13 under the U.S. average. Top 10 RevPAR outperformed the U.S. by $2 at $100, up 19.7% year over year.

Among the top 10 countries, China posted the largest year-over-year gain of 15 percentage points to 73.8%, followed by Indonesia and Japan. Occupancy declined in three of the countries: Germany, Italy and Mexico. Both Italy and Germany were in line with pre-pandemic August occupancy patterns. The U.K. reported the highest occupancy again among the top 10, up 2.2 percentage points to 80.8%, while Mexico posted the lowest.

Outside of the top 10, the highest year-over-year occupancy gainers in each region were:

• El Salvador in the Americas, up 19.7 percentage points to 79.9%.
• Sri Lanka in Asia-Pacific with a gain of 37 percentage points to 64.3%.
• Estonia in Europe, up 19.5% to 82.9%.
• Kenya in the Middle East and Africa with a 26% increase to 55.7%.

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.

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