US hotel occupancy reverses three-week trend

U.S. hotel industry employment rose 0.4 percentage points from a year ago, reversing the annual declines of the previous three weeks.

Weekends delivered the strongest gains, with employment up 1 percentage point, followed by Monday through Wednesday weekdays, up 0.6 percentage points. Employment on shoulder days – Sunday and Thursday – fell by 0.4 percentage points.

That strong weekend performance was likely boosted by the early Halloween holidays, given that the actual holiday fell the following week on a Tuesday, a school night. The average daily rate increased by 3.9%, the sixth consecutive week above 3%, with weekdays showing the largest increase, at 4.5%, followed by weekends at 3.9% and over-the-shoulder days at 2.8%.

Available room revenue increased 4.6% year over year, the highest growth rate in the last three weeks and among the highest in the last 25 weeks. Over the past six weeks, 60% of the industry’s revenue gains have come from weekdays, with the top 25 markets contributing as much as the other 143 markets. This provides further evidence that business travel is recovering on the back of conferences and group meetings.

Weekdays and weekends were steady in the top 25 markets. Compared to last year, employment increased by 1.3 percentage points on weekends and 1.1 percentage points on weekdays. Shoulders were softer, increasing by just 0.4 percentage points. While occupancy was strongest during the weekend, ADR increased the most during weekdays, up 5.4%, resulting in a weekday RevPAR increase of 6.9%. Weekend ADR rose 4%, with RevPAR up 5.8%. Shoulder-day ADRs increased 3.3% and reported a RevPAR increase of 3.9%.

In the rest of the country, the performance was weaker, with employment increasing by less than 1 percentage point on weekends and weekdays, while falling on shoulder days. ADR was slightly healthier: up 3.7% on the weekend, up 3.4% on weekdays and up 2% on weekdays.

Three top 25 markets – New York, Las Vegas and Boston – continued to report strong performance, with occupancy exceeding 85% for the third consecutive week and double-digit ADR growth. These three markets also reported the highest weekday and weekend occupancy of any of the top 25 markets. Other markets that saw strong weekday occupancy at or above 80% included San Francisco, Washington, D.C. and Nashville. ADRs in these markets also showed strong growth. Austin topped the non-top 25 markets, with occupancy reaching 82.4%.

Group demand among luxury and upscale hotels rose 4.3% year-on-year, while falling slightly from the previous week’s post-pandemic peak. After Labor Day, group demand increased an average of 3.1% year-over-year. Compared to the same period after Labor Day in 2019, group demand was down 1.5% with employment up 1.9 percentage points. Group ADR for the last week was $259, up 4.5% on the year. Adjusted for inflation, ADR is up 2% over 2019. With the fall conference season coming to a close, group meetings and events are on the way back. The top 25 markets posting the largest aggregate search gains of 5 percentage points or more include San Francisco, Atlanta, St. Louis and Washington, DC. Among key markets, only Oahu has surpassed 2019 group levels over the past seven weeks.

Luxury, upscale and upscale hotels all posted strong weekend performances with occupancy increases of 3 percentage points or more over the previous year. Weekend ADR growth was healthy for luxury hotels, up 4.3%, and more moderate for upscale, up 2.3%, and luxury, up 1.1%. Upscale and upscale hotels reported strong weekday occupancy increases of 3.7% and 3.1% respectively, with all three higher-end hotel classes recording weekday ADR increases of 3%. Upper-midrange hotels generally matched the industry’s overall increase in occupancy and ADR for both weekends and weekdays. Mid-range hotels were essentially flat, and budget hotels saw occupancy decline on all days of the week with only a slight improvement in ADR.

Global employment, excluding the US, remained just above 70%, but was down from a week ago. Compared to a year ago, employment continued to show steady growth of 6.4 percentage points. ADR and RevPAR also showed strong year-over-year growth of 8.9% and 19.9% ​​respectively.

Employment for the top 10 countries, based on total supply, was 72.1%, up 8.9 percentage points over the year. The gain in the top 10 was almost entirely due to China, where employment increased by 21 percentage points over the year. Without China, employment would have increased slightly. As has been the case for weeks, top 10 ADR and RevPAR showed strong year-over-year growth of 9.3% and 24.7% respectively.

France saw the biggest decline in employment among the top 10, down 3.5 percentage points year-on-year to 65.1%. The country has hosted both Rugby World Cup finals at the Stade de France. While Paris saw largely flat occupancy on match nights – up 0.5 percentage points and 0.2 percentage points – the days leading up to those nights saw an average drop of 10.8 percentage points. Lyon and Marseille, having hosted some of the earlier matches also in the week of the finals, saw overall occupancy decline by 4.6 percentage points and 1.8 percentage points respectively. Despite lower occupancy, ADR in Paris jumped to $581 over the weekend, up 47.2% year-on-year. Overall, ADR in France grew by 13% year-on-year.

Outside the top 10 countries, employment is led by:

  • Americas: El Salvador employment was 78.2%, up 19 percentage points year over year.
  • Asia Pacific: Fiji’s employment was 83.7%, up 4.7 percentage points year-on-year. Fiji also had the highest employment of any country.
  • Europe: Employment in Serbia was 79.3%, down 5.2 percentage points on the year.
  • Middle East and Africa: UAE employment was 82.3%, up 2.1 percentage points year-on-year.

The U.S. hotel industry performed as expected, led by solid weekday growth, likely driven by conventions and group meetings ahead of Halloween week, along with increased business travel. The growth over the weekend was somewhat of a surprise and better than what it was a year ago, which we attribute to football games and other events. Also surprising this week was the fall in annual employment among key European countries such as Britain, Germany, France and Italy.

As we have written for the past two weeks, the US performance for the week ending November 4 will be weak due to the impact of Halloween, which fell on a Tuesday this year. We expect employment to decline by about 8 percentage points over the year. The week after Halloween will see a rebound, but it will be short-lived as the Thanksgiving and Christmas holidays approach. Globally, performance will remain strong, but it will also begin to slow.

Isaac Collazo is vice president of analytics at STR. Chris Clouda is Senior Director of Market Analysis at STR. William Ans is a Research Analyst at STR.

This article is 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 STR data analysis, visit the Data Information Blog.

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