As expected, US hotel demand rebounded for the week of September 11-17, 2022, rising 13% week-on-week (WoW) and pushing occupancy to a six-week high of 69.6%. Weekday (Monday-Wednesday) occupancy was slightly better at 69.9%, with the metric hitting 75.5% across the top 25 markets — the second-highest level of the pandemic-era after the week ended June 18, 2022. Nominal average daily rate (ADR) hit a seven-week high ($156), up 5.8% WoW and +18% yoy. Real ADR was the same as 2019. After three weeks under $100, nominal revenue per available room (RevPAR) rose to $108, up 19.4% from a week ago and 31% from the same week of the previous year. The real RevPAR was just below the value of 2019.
Over the past 22 years, demand growth has averaged 14.5% in the first full week after the Labor Day holiday, so this latest increase has lagged slightly behind that growth rate and is at the lower end of the range (+11.8% by April 18). %). However, demand was highest for the whole week after the Labor Day holiday (27.2 million). At the same time, that level of demand for week 38 wasn’t the highest — it happened in 2019. The difference between the two was just 8,000 room nights, even though week 38 was two weeks after the Labor Day holiday in 2019.
We can surmise that business and group travel were the biggest contributors to the strong growth in weekday demand, which was at the seventh highest level since the pandemic began. The previous six pandemic-era peaks in weekday demand were all reached during the 2022 summer season, when leisure travelers also filled hotel rooms. Excluding the peak summer travel months (June and July), weekday demand was the highest since the pandemic began and the 15th-highest on record since 2000.
The top 25 markets benefited the most from the return of business and group travelers. Weekday occupancy exceeded 70% in 18 markets, with six (Boston, Chicago, Denver, New York City, San Francisco and Seattle) exceeding 80%. Seattle (92%) and NYC (91%) topped this ranking. Additionally, Chicago, New York and Seattle all saw their highest weekday demand since the pandemic began. And while Philadelphia’s weekday occupancy rate was 69%, it also saw the highest weekday demand of the cycle. Four markets were laggards this week (Houston, Miami, New Orleans and Tampa) with weekday utilization in the low 60’s. September is typically the lowest occupancy month for Miami and Tampa, so it’s no surprise, but Houston and New Orleans tend to spike at this time of year.
Central business districts (CBDs) also saw the highest weekday demand and occupancy during the pandemic era, with 79% occupancy. Four central business districts (Boston, Chicago, New York Financial District, and Seattle) had weekday occupancy rates above 90%, all others above 65%, and most above 70% except New Orleans (47%). Demand and occupancy for the full week (76%) were also the highest of the pandemic era.
Group demand on weekdays also hit a pandemic-era record, as overnight stays at luxury and upscale hotels topped 1.1 million. Weekday group demand was also among the largest in the last 20 years, ranking 19th. We estimate that total group demand, all chain scales and grades, accounted for more than a third of the increase in weekday demand and accounted for 16% of the industry’s total weekday demand .
Weekday occupancy rates across the predominantly business-oriented chain scales (Upper Upscale, Upscale, and Upper Midscale) were all in the mid-range of 70%, led by Upper Upscale (79%). Unsurprisingly, Upper Upscale saw the highest level of demand since the pandemic began. More than half of the increase in weekday demand from upper upscale chains came from the increased group, which accounted for 36% of weekday demand. Four of the seven chain scales also saw full-week occupancy rates above 70%, with Luxury reporting the highest weekly occupancy rate of the pandemic era (73%).
Weekend occupancy also returned from the slump after the summer at 77%. Weekend occupancy was slightly higher (78%) in the top 25 markets, with half the markets above 80% and all but two above 70%. The highest weekend occupancy rates of any submarket were in Gatlinburg (95%) and Pigeon Forge (95%), both in Tennessee.
Weekly nominal ADR showed a big jump, but real ADR also rose to $135, slightly better than the 2019 comparison week. Top 25 markets weekly nominal ADR hit a pandemic-era high of $189 -Dollar). did the real ADR ($164), which surpassed the previous high at the beginning of the year and hit the highest level since the first week of December 2019. The nominal weekday ADR in the top 25 was even higher ($195) and was the third highest in history. Exceeded weekday real ADR ($169).
With demand picking up and ADR continuing to rise, nominal RevPAR over the week was above 2019 levels in almost all markets. Half of all markets had weekly real RevPAR above 2019 including Chicago, Miami, Orlando, San Diego and phoenix. Among the top 25 markets, Orlando had the highest real weekday RevPAR over 2019, which was 19% higher than this year.
In the 28 days ended September 17th, 43% of the 166 STR-defined US markets had real RevPAR above 2019. Only two markets, San Jose and San Francisco, were still rated “in”. “Recession” as real RevPAR was less than 80% of 2019 value.
Around the world
Occupancy outside the US reflected a second straight week of growth, rising 2.3 percentage points to 65.8%. Despite this growth, occupancy was more than 10 percentage points lower than 2019. Both nominal ADR and RevPAR also increased (+1.2% and +4.9%, respectively) for the second straight week. Both metrics remained above their 2019 levels, as they have for the past 12 weeks. Unsurprisingly, real RevPAR, which has averaged 5% above 2019 over the past four weeks, is being driven by strong ADR growth, which has averaged more than 17% higher than 2019.
Ireland (92%) had the highest country-level occupancy this week, led by Dublin (96%), where occupancy grew by more than six percentage points week-on-week and was the highest market occupancy rate in the world. Several Garth Brooks tour dates have played a key role in raising Dublin’s standards. Greece also had a strong occupancy rate (86%), as did Luxembourg (85%) and Portugal (84%).
Among the top 10 countries by supply, the UK had the highest weekly occupancy (84%), followed by Italy (83%) and Spain (81%). Overall, occupancy in the top 10 countries was 65%, which was more than 12 percentage points below the comparable week in 2019. Japan and China continued to weigh heavily on overall occupancy in the top 10 countries. Japan was 17 percentage points below 2019, while China was 21 percentage points below. However, after five weeks of decline, China saw occupancy increase by 1.6 percentage points WoW.
The percentage of markets at “Summit” (over 2019) real RevPAR on a 28-day moving average slowed to 43% from 45% the week before. Additionally, a higher percentage of markets were in “Depression” (true RevPAR less than 50% of 2019), with the other categories remaining somewhat stable.
While a week does not represent a trend and the path of recovery for business and group travel is likely to have many ups and downs, the week following Labor Day has shown that the segment’s recovery has gained momentum — particularly in the top-25 -Markets where the absence was evident. However, the next few weeks will likely generate some concern regarding these segments, but it’s all predictable. The week ending September 24th is likely to be flat to bullish week by week. Thereafter, in the following two weeks (ending October 1 and October 8) due to the observance of Rosh Hashanah, September 25-27, and Yom Kippur, October 4-5, there will be weekly declines, which will impact the business and the group travel. Business and group travel on weekdays should then resume and continue for the month. In addition, vacation travel is supported through various school holidays around Columbus/Indigenous Day.
STR provides best-in-class data benchmarking, analytics and market insights for the global hospitality industry. Founded in 1985, STR has a presence in 15 countries with North American headquarters in Hendersonville, Tennessee, international headquarters in London and Asia Pacific headquarters in Singapore. STR was acquired in October 2019 by CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces. Visit str.com and costargroup.com for more information.
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