Market Recovery Monitor - 15 January 2022

U.S. hotel performance continued to meander with occupancy remaining below 50% for a second straight week during 9-15 January. At 48.8%, occupancy was in the bottom third of comparable weeks going back to 2000. Also, the week’s occupancy was 10 percentage points lower than the 2019 comparable as that gap increased from the previous week. Weekday occupancy continued to be a drag on performance even though it was up two percentage points from the previous week to 45.3% with this week’s weekday occupancy among lowest seen since early last year. Sunday was particularly low at 39.2% before Monday through Wednesday occupancy hit 46.5%, but those three days were more than 14 percentage points lower than the same days of 2019. The weekend produced better results (57.5%), but it too was on the lower range of performance as compared with the previous 52 weeks.

More than half of all U.S. hotels reported occupancy below 50% during the week, but a week ago, nearly 60% of hotels were in that range. Weekly occupancy ranged from 34% in large, urban hotels within the Top 25 Markets to 56% in airport hotels regardless of market. Weekday (Monday-Wednesday) and shoulder (Sunday & Thursday) occupancy (~34%) was weak in large hotels in and out of the Top 25 Markets, highlighting the dearth of business and conference travel. However, weekend occupancy for large hotels (55%) was better and closer to the level seen by all other hotels (59%). The highest occupancy was seen in small-to-medium-sized resort hotels where weekend occupancy reached 70%.

On a market-level, the Florida Keys led the nation with the highest weekly occupancy (79%), which was higher than the comparable week of 2019 and 21 percentage points higher than 2021. Of the top 10 highest occupancy markets, seven were in Florida with all reporting double-digit year-on-year gains. Two Hawaiian markets (Hawaii/Kauai and Oahu) were also in the top 10 this week indicating that leisure travel remains strong, but in a bit of a lull post-holidays. While weekly occupancy is weaker than what we had seen for most of last year, it’s worth noting that nearly every market (96%) posted year-on-year occupancy gains. Additionally, 39 markets had occupancy above their 2019 levels, mostly in rural areas. Occupancy for key Top 25 Markets was soft as New York City, Washington DC, San Francisco, and Chicago all reported the measure at 40% or less. Weekday occupancy for those four markets was even weaker at 36% or less. Some the weakest geographical occupancy was in central business districts (CBD) of the Top 25, which had weekday occupancy of 34%. Chicago was particularly weak with CBD weekday occupancy of 18%.

Average daily rate (ADR) increased week over week and was just below the 2019 comparable. Even though the national average was under 2019, two thirds of all markets and a similar percentage of hotels were above 2019’s level. Nearly 40% of hotels reported weekly ADR that was 10% or more of their 2019 value. Among those hotels with a 10+% ADR premium against 2019, 62% are in suburban or small metro/town locations within the top 75 U.S. markets based on supply. Weekday ADR fell by two percent week on week whereas weekend ADR was up 8% week on week with a 10% premium versus the same weekend in 2019. More than 75% of hotels reported an ADR premium to 2019 over the weekend with 51% achieving more than a 10% premium. Additionally, of hotels opened in both 2019 and 2022, 65 had an ADR above US$1,000 this week versus 21 in the same week of 2019.

Revenue per available room (RevPAR) advanced 9% week on week to US$122, which was 82% of 2019’s value. On an inflation-adjusted basis, the week’s RevPAR was 74% of the 2019 comparable with 20% of markets at “peak” (RevPAR indexed to 2019 above 100). About 37% of hotels had an inflation-adjusted RevPAR higher than in 2019. After reaching an index of 109 in the week ending 1 January 2022, the 28-day average fell to 96 with 61% of markets at “peak.” On an inflation-adjusted basis, 46% of markets were at “peak” with another 40% in “recovery” (RevPAR indexed to 2019 above between 80 and 100).

Outside of the U.S.
Weekly occupancy fell to 40% outside of the U.S. as several countries saw large week-on-week declines, including Russia, the United Arab Emirates and most of the top 10 largest counties based on hotel supply. Notable exceptions in the top 10 included the U.K., Indonesia, China and Canada. Indonesia continued to report the highest occupancy among that top 10 (52%) with Germany remaining at the bottom (25%).

U.K. occupancy advanced to 45%, up 7 percentage points week on week as a number markets saw growth. Unfortunately, ADR didn’t follow suit, down 2% week over week. However, regional markets saw increases (South Yorkshire and Herefordshire/Warwickshire/Worcestershire) as did a few cities (Birmingham, Newcastle and Bristol).

China’s weekly occupancy increased to 48% with Wuhan, Chengdu, Guangzhou & Hangzhou seeing occupancy gains of more than 10%.

Last week’s occupancy boost in Russia was temporary and driven by Orthodox Christmas Day (7 Jan). Occupancy came down week over week by 42%, with declines seen across all markets.  

On a market-level, the number of markets in “depression” (RevPAR indexed to 2019 below 50) saw a sharp increase with less markets in “peak” and “recovery” than a week ago.

Big Picture
This week’s performance again highlighted the impact of Omicron, especially on weekday business and conference travel. But all was not dire as occupancy did increase week on week, and the weekend showed some strength. The next two to three weeks are likely to cause worry and concern, but we expect the recovery to continue, albeit in a non-linear fashion, with performance slowly strengthening as the month advances and spring nears in the northern hemisphere.