Business, Group Travel Propel Weekly US Hotel Performance

While the week is not trending and the road to recovery for business and group travel will likely have many ups and downs, the latest weekly performance data from STR shows that hotel demand is rebounding, particularly in the top 25 US markets. where his absence was very conspicuous.

The coming weeks will likely cause some concern for hoteliers around these demand segments, but it’s all predictable. The Rosh Hashanah and Yom Kippur Jewish holiday celebrations are expected to have a negative impact on business and group travel, and leisure travel demand will be supported by US school holidays such as the Columbus/Indigenous Peoples Day celebration.

After several consecutive declines each week, typical for this time of year as the travel season transitions from summer to fall, U.S. hotel demand soared for the week ending September 17. Compared to the previous week, demand increased by 13%, while occupancy reached a six-week high of 69.6%.

Weekday occupancy was slightly better at 69.9%, and that metric was even better in the top 25 markets at 75.5%. The market’s hotel occupancy on the top 25 days of the week has only been higher once since March 2020 — the week of June 18, 2022.

The nominal average daily rate hit a seven-week high of $156, up 5.8% week-on-week and 18% year-over-year. Real ADR, adjusted for inflation, was flat with the same week in 2019. After three weeks below $100, nominal revenue per available room rose to $108, 19.4% higher than a week ago and 31% higher than the same week last year. Real RevPAR was slightly below the 2019 value.

Over the past 22 years, US hotel demand for the first full week after the Labor Day holiday has increased an average of 14.5%.

This year in the week ending Sept. 17, demand rose 13 percent, at the lowest end of the range seen since 2000. The U.S. hotel industry sold 27.2 million room nights, the most ever for a full week after the Day of Labor. However, due to the calendar shift of the holiday, it was not the highest demand for the 38th week of the year. That record was set in 2019, two weeks after the Labor Day holiday, when the industry sold 8,000 more room nights than this year.

Business and group travel contributed the most to the sharp increase in weekday demand.

Weekday demand was the seventh highest since the start of the pandemic. The previous six pandemic-era highs were all achieved during the summer of 2022, when leisure travelers also filled hotel rooms. Excluding the peak summer months of June and July, weekday demand was the highest since the start of the pandemic and the 15th highest all-time since 2000.

The top 25 US hotel markets benefited most from the return of business and group travelers.

Weekday occupancy exceeded 70% in 18 of the markets with six — Boston, Chicago, Denver, New York, San Francisco and Seattle — exceeding 80%. Seattle and New York led the top 25, both exceeding 90% occupancy for the week.

The hotel markets of Chicago, New York and Seattle had their highest daily demand since the start of the pandemic. Philadelphia also hit a pandemic-era demand record with weekday occupancy at 69%.

Four markets — Houston, Miami, New Orleans and Tampa — lagged with weekday occupancy in the low 60% range. September is usually the lowest occupancy month for Miami and Tampa, so it’s no surprise, but Houston and New Orleans occupancy tends to increase this time of year.

Hotel demand and occupancy in the central business district on weekdays (79%) was also the highest since the beginning of the pandemic era. Weekday occupancy exceeded 90% in four central business regions — Boston, Chicago, New York’s Financial District and Seattle. New Orleans had the lowest weekday occupancy of the central business districts at 47%. All other central business districts reported weekday occupancy above 65%, and most were above 70%. Demand and full-week occupancy for central business districts was 76%, also the highest of the pandemic era.

Demand for group weekdays was also the highest since March 2020, as luxury and luxury hotels sold more than 1.1 million room nights during the week.

The group’s total demand, all chain sizes and categories, accounted for more than a third of the weekday demand gain and made up 16% of the industry’s total weekday demand.

Weekday occupancy was in the mid-70s at mostly business-oriented chain ranges — including upscale, luxury and upper midscale — led by upscale hotels at 79%. Unsurprisingly, demand for high-end hotels has been the highest since the start of the pandemic. More than half of the increase in weekday demand at higher end hotels came from increased group demand. Full-week occupancy exceeded 70% in four of the seven chain ranges, with luxury peaking at 73%.

Weekend performance also returned from its post-summer hibernation with 77% occupancy. Weekend occupancy was slightly higher in the top 25 markets at 78%, with half of the markets reporting occupancy above 80% and all but two above 70%. The highest weekend occupancy among all submarkets was in Gatlinburg and Pigeon Forge in Tennessee, both at 95%.

Weekly real ADR, adjusted for inflation, rose to $135, which was slightly better than the corresponding week in 2019. Weekly nominal ADR in the top 25 market hit a pandemic-era high of $189, as was the real ADR at $164, reaching its highest level since the first week of December 2019. The week’s nominal ADR in the top 25 markets was even higher at $195 and was the third highest on record. Actual ADR for the week exceeded $169.

With demand jumping and ADR continuing to rise, nominal RevPAR was above 2019 levels in nearly every market during the week. Half of all markets had weekly Real RevPAR above 2019, including Chicago, Miami, Orlando, San Diego and Phoenix. Among the top 25 markets, Orlando led the way compared to 2019, with actual RevPAR for the week up 19%.

In the 28 days ending September 17, 43% of the 166 STR-defined markets had actual RevPAR above 2019. Only two markets, San Jose and San Francisco, were still categorized as “down” as actual RevPAR was less than 80% of what it was in 2019.

Isaac Collazo is VP of Analytics at STR.

This article represents an interpretation of data collected by CoStar’s hosting analytics company, STR. Please feel free to contact an editor with any questions or concerns. For more analysis of STR data, visit the information data blog at STR.com.

Return to the Hotel News Now home page.

Leave a Comment

Your email address will not be published.