Business, Group Travel Advance Weekly US Hotel Performance

While a week is not trending and there will likely be many ups and downs on the road to recovery for business and group travel, the latest weekly performance data from STR shows demand for hotels is coming back, especially in the US’s 25 largest markets. where its absence is very evident.

The next few weeks will likely cause some concern among hoteliers in these demand segments, but it’s all predictable. Jewish holidays Rosh Hashanah and Yom Kippur are expected to have a negative impact on business and group travel, and the demand for leisure travel will be helped by US school holidays such as Columbus/Indigenous People’s Day.

After several consecutive week-to-week dips typical for this time of year as the travel season shifts from summer to fall, US hotel demand has risen again. Week ending 17 September. Compared to the previous week, demand increased by 13%, while occupancy reached the highest level in six weeks at 69.6%.

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

Nominal average daily rate reached a seven-week high of $156, up 5.8% on a weekly basis and 18% year-on-year. The actual ADR adjusted for inflation was equal to that in the same week of 2019. After three weeks under $100, nominal revenue per available room jumped to $108, 19.4% higher than a week ago and 31% higher than the same period. week last year. The actual RevPAR was just below the 2019 value.

Over the last 22 years, US hotel demand has increased by 14.5% on average for the first full week after the Labor Day holiday.

In the week ending September 17 this year, demand rose 13% at the lower end of the range seen since 2000. The U.S. hotel industry sold 27.2 million nightly rooms in the week after Labor Day, the highest figure ever. However, there was no peak demand for the 38th week of the year due to the calendar shift on the holiday. That record was broken in 2019, two weeks after the Labor Day holiday, when the industry sold 8,000 more rooms than this year.

Business and group travel contributed the most to the strong growth in demand on weekdays.

Weekday demand was the seventh highest since the start of the pandemic. All six previous pandemic-era peaks were achieved during the 2022 summer season, when leisure travelers filled hotel rooms. Excluding the top summer travel months of June and July, weekday demand was the highest since the start of the pandemic and the 15th all-time high until 2000.

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

Weekday occupancy exceeded 70% and exceeded 80% in 18 markets, six of which (Boston, Chicago, Denver, New York, San Francisco and Seattle). Seattle and New York both hit the top 25 with 90% occupancy throughout the week.

The Chicago, New York and Seattle hotel markets saw the highest weekday demand since the start of the pandemic. Philadelphia also broke a demand record during the pandemic with a weekday occupancy rate of 69%.

Four markets (Houston, Miami, New Orleans and Tampa) were below 60% weekday occupancy. September is normally the lowest occupancy month for Miami and Tampa, so this is no surprise, but in Houston and New Orleans, occupancy tends to rise at this time of year.

The central business district weekday hotel demand and occupancy rate (79%) were also the highest since the start of the pandemic period. Weekday occupancy exceeded 90% in four central business districts – Boston, Chicago, the New York Financial District and Seattle. New Orleans had the lowest weekday occupancy rate of any central business district at 47%. All other central business districts reported weekday occupancy rates above 65%, and most were above 70%. Full-week demand and occupancy for central business districts was 76%, the highest level of the pandemic period.

Weekday group demand was also the highest since March 2020, as luxury and high-end hotels sold more than 1.1 million overnight stays during the week.

Total group demand, all chain scales and classes, accounted for more than a third of the gain in weekday demand, accounting for 16% of the industry’s total weekday demand.

Weekday occupancy was in the mid-70% range, from 79% at predominantly business-focused chain scales – including high-end, high-end, and upper-midscale – to mid-70% managed by high-end hotels. Not surprisingly, high-end hotel demand was at its highest since the start of the pandemic. More than half of the weekday demand increase for high-end hotels came from increased group demand. On four of the seven chain scales, full week occupancy exceeded 70%, taking the luxury lead to 73%.

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

Real weekly ADR adjusted for inflation rose to $135, slightly better than the comparable week of 2019. The top 25 market nominal ADRs per week reached $189, the pandemic-era high, while the real ADR reached its highest level of $164 since the first week of December 2019. The weekday nominal ADR in the top 25 markets was even higher at $195, making it the third highest in history. Actual weekday ADR exceeded $169.

With the increase in demand and continued increase in ADR, nominal RevPAR was above 2019 levels in almost every market during the week. Half of all markets had Real RevPAR weekly over 2019, including Chicago, Miami, Orlando, San Diego, and Phoenix. Among the top 25 markets, Orlando led the way with 19% higher weekday real RevPAR compared to 2019.

In the 28 days ending Sept 17, 43% of 166 STR defined markets had over 2019 true RevPARs. Only two markets, San Jose and San Francisco, are still classified as in “recession” as they are below the actual RevPAR. 80% of 2019.

Isaac Collazo is the VP of Analytics at STR.

This article represents an interpretation of data collected by STR, CoStar’s hospitality analytics firm. Please feel free to contact an editor with any questions or concerns. For further analysis of STR data, Visit the data insights blog on STR.com.

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