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The U.S. continues to settle in to a more normal hotel performance pattern, punctuated by improvements in top 25 markets and bolstered by weekday business travel flowing into key markets.
But analysts continue to warn that strong year-over-year comparisons are coming into play as the effects of last year’s omicron variant of COVID-19 fall off the calendar.
Still, as spring break season kicks into high gear in the U.S. and elsewhere, CoStar hospitality analytics firm STR predicts more performance gains in the coming weeks.
Outside the U.S., hotel occupancy continues to strengthen as the spring holiday season begins. Last week, six countries plus the United Arab Emirates notched occupancy levels higher than 80%, including four Caribbean locations.
Hotels in the United States continued their steady seasonal lift with occupancy up to 64.7%, a 20-week high, for the week ending March 11. The last time weekly occupancy was that high was in late October 2022.
Average daily rate increased almost $7 week over week to $158. Aside from the week including New Year’s Eve, that was the best weekly hotel ADR since October 2022, representing an 8.1% increase year over year, ahead of the 6% annual pace of inflation. Revenue per available room increased to $102 — up 7.7% year over year — on that combined strength of occupancy and ADR.
Seven-day total demand for the U.S. exceeded 25.1 million rooms sold, which was:
- Up 3.3% from last year.
- Up 0.7% from the matched week in 2019.
- The second-highest for the comparable week dating back to 2000.
The highest demand for the comparable week came in 2018, with less than 100,000 more rooms than this week in 2023.
The U.S. top 25 markets continued to see faster annual demand growth, up 7.6% year over year compared to up 3.3% for non-top 25 markets. For the time being, the top 25 markets collectively maintain a narrow demand deficits (-0.7%) from 2019. In comparison, total demand within non-top 25 markets continues a consistent pattern of demand surpluses, with the recent week up 1.7% above its pre-COVID-19 comparable.
Previous updates highlighted an industry “return toward normalcy,” a pattern that continued in the most recent week as the top 25 markets make up ground faster from their deeper performance deficits in 2020 to 2022. Compared to the same week last year, the top 25 markets in aggregate reported:
- Considerable gains in occupancy, which was up 4.3 points to 72.3%; ADR, up 11.5% to $189; and RevPAR, which increased 18.5% to $137.
- Annual occupancy gains in 21 of 25 markets, led by Washington, D.C., up 12.1 points to 67.6%; New York City, up 10.9 points to 78.3%; and Boston, up 9.6 points to 65.4%.
- Double-digit RevPAR growth in 21 of 25 markets, led by Washington, D.C., up 50.2% to $124; Boston, up 39% to $123; San Francisco, up 38.8% to $144; and New York City, up 32.7% to $181.
Non-top 25 markets, in contrast, are showing more muted gains given their substantial recovery in the prior two years.
Group demand was up in most of the top 25 with solid week-over-week growth in Anaheim (Orange County), California; Orlando, Florida; and Nashville, Tennessee. Transient bookings increased by a healthy 6.4% week over week.
Hotel occupancy Monday through Wednesday showed solid gains from the previous week, ranging from an increase of 3.5 points on Monday to an increase of 5.3 points on Wednesday within the top 25. Occupancy in the 20 key central business districts reached 69.6% on weekdays — Monday through Wednesday nights — and ranged from 94.9% in Houston to 40.5% in Minneapolis. Eight of the 20 central business districts reported occupancy at or above 79%, including Atlanta, Dallas, New York’s Financial District, and Washington, D.C.
Non-top 25 markets showed more seasonally modest weekday occupancy gains but experienced small declines from the combined Friday to Saturday period last year.
Hotel occupancy outside the U.S. continued to strengthen against last year’s omicron comps. The most recent week’s occupancy (64%) improved modestly over the prior week as the spring holiday season begins. On an annual basis, the recent week’s results increased 14.2 points year over year.
The United Arab Emirates reclaimed its top global occupancy position at 89%, trading places with Barbados at 87.8%. Three other Caribbean countries were above 80% occupancy: Jamaica, Puerto Rico and the Dominican Republic. In other corners of the world, Senegal and New Zealand rounded out the list of countries above 80% occupancy.
Among the 10 largest countries by hotel supply, occupancy reached 65% on average with a 13.1% year-over-year increase, which was higher than the rest of the world with an increase of 10.4% to 52%. The United Kingdom reported the highest weekly occupancy at 74.5% and has maintained the top spot for all of 2023. Germany, Indonesia and China saw the greatest year-over-year gains.
Isaac Collazo is VP of analytics at STR, Chris Klauda is senior director of market insights at STR and M. Brian Riley is senior 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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