Market Recovery Monitor - 9 April 2022

U.S. hotel occupancy advanced to 66.4% in the week ending 9 April 2022, up 2.3 percentage points from the prior week and 3.3 percentage points off the level attained in the corresponding week of 2019. For the industry, this week’s occupancy was the ninth highest since the beginning of the pandemic, but for the luxury (72.2%) and upper upscale (69.6%) chain scales, it was the highest. Average daily rate (ADR) advanced 3.1% in the week to its third highest level of the pandemic-era (US$150). Revenue per available room (RevPAR) grew a strong 6.8% to US$100, the fourth best level in the metric since March 2020. Both ADR and RevPAR remained well ahead of the levels seen in the comparable week in 2019.

Weekday (Monday – Wednesday) occupancy increased the most in the week, up 2.7 percentage points to 64.2%. Weekday occupancy has been above 60% for the past five weeks. Shoulder days (Sunday & Thursday) also saw solid growth (+2.5 percentage points) with occupancy rising to 60.1%. Weekend occupancy remained above 70% for an eighth consecutive week.

Top 25 Market occupancy reached 71%, which was only its third time above 70% for that group since the pandemic began with all three occurrences happening in the past four weeks. Like the overall industry, the largest increase in demand was seen in the weekdays, which accounted for 46% of the demand gain week on week. Orlando, Seattle, and Washington D.C. made up more than half of the weekday room night growth within the Top 25 Markets. D.C. and Seattle both recorded their highest weekday occupancies of the pandemic-era. Other gainers included San Diego, Miami, and New York City. New York City weekday occupancy (74.6%) was its second highest since March 2020 and has been above 70% for the past four weeks. Even though that occupancy is near a pandemic high, it was still more than 13 percentage points lower than what it was in 2019. The good news is that the occupancy gap to 2019 has been lessening over the past four weeks. The same trend was seen in Orlando, where weekday occupancy surpassed 80% and was four percentage points higher than what it was in 2019, which is only the third time this has happened since the pandemic began.

Eight markets outside the Top 25 achieved pandemic-era occupancy records including Savannah (88.6%) and Augusta (87.8%), with the latter benefiting from the Masters Tournament. These two markets also led the nation in occupancy. Charleston, Charlotte, Columbia, Jacksonville, Raleigh/Durham, and San Jose were the others that recorded pandemic-era highs in occupancy this week.

Occupancy in Central Business Districts (CBDs) reached its highest weekly occupancy level of the past 109 weeks, up 3.1 percentage points to 70% as five CBDs (Austin, Philadelphia, San Diego, Seattle, and D.C.) saw new highs.  Shoulder (65.8%) and weekday (67.1%) CBD occupancy were also the highest of the pandemic period. While CBD occupancy continues to climb, the gap to 2019 widened to 16 percentage points, the largest of the past four weeks.

Group demand among luxury and upper upscale hotels reached its highest level since the start of the pandemic. As compared with 2019, group demand in the most recent week was 23% lower with weekday and shoulder group demand down 26% versus the matching week in 2019. Weekend group demand accounted for 30% of this week’s total group demand and continues to be the closest to 2019 levels with the week’s result 13% lower than in 2019. The Top 25 Markets accounted for the largest growth in group demand this week, led by Orlando. Weekday demand growth was also led by Orlando while D.C. and Seattle also saw solid gains. Nine markets, including Chicago and Orlando saw their largest group demand since the start of the pandemic.

For the past nine weeks, weekly ADR has been above what it was in 2019, with the most recent week’s result 11% higher. On an inflation-adjusted (real) basis, weekly ADR was one percent lower than what it was in 2019.  Real weekend ADR has been above 2019 in eight of the past nine weeks while shoulder days have surpassed 2019 in only three of the nine weeks and weekday ADR has yet to do so. Taking a closer look, in 2019 during the nine weeks ending 9 April, 44% of industry ADR was attributed to weekdays with 31% comprising weekends and the remainder by shoulders. In 2022, 36% of industry ADR has been from weekends with 39% from weekdays. The contribution from shoulders was essentially unchanged.

Thirteen markets reported their highest nominal ADR of the pandemic era this week including Augusta, Memphis, New Orleans, Philadelphia, and D.C. Overall, 141 of the 166 STR-defined U.S. markets had nominal ADR above 2019, up from 138 a week prior but down from 150 two weeks before. Real ADR was higher in 79 markets. For the year, 56 markets have a real ADR above 2019, up from 11 a year ago.

Although industry nominal RevPAR was only the fourth highest of the pandemic era, Top 25 Markets (US$127) and CBDs (US$162) reached a pandemic-era high. Among the Top 25 Markets, New Orleans and D.C. saw their nominal RevPAR reached its highest level of the past 109 weeks. In CBDs, New Orleans, Philadelphia, San Diego, Seattle, and Washington, D.C. reported pandemic-era records for nominal RevPAR.  Overall, Maui had this week’s highest nominal RevPAR (US$483) followed by the Florida Keys (US$442) and Hawaii/Kauai (US$354). Augusta had the nation’s fourth highest nominal RevPAR (US$344). A week prior, Augusta was ranked 62nd, and two weeks prior, it was 136th of the 166 STR-defined markets.

Real industry RevPAR was the sixth highest so far, and coincidently, six markets reported their highest Real RevPAR of the pandemic era including Augusta, Charleston, Columbia, New Orleans, and Savannah. For the week, 111 markets saw their nominal RevPAR surpass 2019 comparables, and 69 markets reported real RevPAR higher than in 2019. For the year thus far, 53 markets are above their 2019 levels on a real basis.

Around the Globe
Outside of the U.S., occupancy dipped by 0.7 percentage points to 53.2%. ADR rose 0.8% to US$122, resulting in a slight RevPAR decline (-0.4%) week over week. Forty-eight of the countries tracked on a weekly basis saw a week-over-week drop in occupancy. Several Muslim-majority nations saw week-over-week occupancy declines due to Ramadan, which started 1 April. The United Arab Emirates, for example, saw occupancy fall 23.5 percentage points from the previous week, driven also by the closing of Expo 2020. Occupancy in China showed some recovery, up 1.3 percentage points. Puerto Rico achieved the highest weekly occupancy in the world at 83%, followed by Barbados at 74%. Northern Europe (72%) had the highest occupancy of any sub-continent while Northern Africa had the lowest (32%). 

Berlin and Cologne saw strong ADR growth in the week, an indication that German events are up and running. Berlin hosted Fruit Logista 5-7 April, which boosted weekly ADR by 28.6% versus the previous week. This event helped the market achieve its highest weekly ADR (EUR 117) seen since the start of the pandemic. Cologne saw a 34.1% ADR uptick via the FIBO trade show, which took place 7-10 April.  

Over the past 28 days, 24% of non-U.S. markets remained in “Recession” (RevPAR indexed to 2019 between 50 and 80) with another 16% in “Depression” (RevPAR indexed to 2019 under 50). This was relatively stable with last week, indicating a slight slowdown in the pace of recovery.  

The Big Picture
This week was a bit of a surprise as we expected occupancy to be in a pre-Easter weekend lull. What was even more surprising was the continued recovery in the U.S. Top 25 Markets and Central Business Districts. While there is still a sizeable gap to 2019, the recent trend and overall outlook is encouraging. Looking ahead, the week of Easter should provide a noticeable bump in occupancy given that more than 40% of K-12 schools in the U.S. will be out for a four-day holiday. Additionally, large events are making a comeback, including the New Orleans Jazz and Heritage Festival along with Coachella. May is also expected to see a surge in in-person college graduations, which will further fuel demand as we head into the summer.