Analysis by M. Brian Riley
In 2023, many key U.S. hotel markets caught up on recovery that was held back due to a lack of business travel. That is why markets like New York City and Washington, D.C., were atop the 2023 performance list, while growth leaders from previous years were more grounded due to diminished leisure travel.
A sign of the unusual nature of previous years, a large proportion of both the fastest and slowest recovering markets from early in the pandemic reversed course in 2023. This shows continued balancing toward normal demand patterns. It is also worth noting that natural disasters (wildfires in Hawaii and California, hurricanes in Florida, etc.) moved a handful of U.S. markets to a far side of the growth scale.
As you may recall, 2022 was a very unusual year in the hotel industry as many leisure-oriented markets saw strong performance boosts spurred by pent-up demand. More work-oriented urban markets, on the other hand, as well as certain regions of the country such as the “Rust Belt” and west coast markets were slower to return to normal. That trend had mostly reversed itself during the second half of 2023 with several key Top 25 Markets making giant strides. Meanwhile, demand flattened (or went in reverse) for many leisure markets in 2023. Only a minority of those leisure-oriented markets, like Florida with the added negative impact of a major hurricane, saw small annual room rate decreases in 2023.
To present this trend in 2023, we examined the year-over-year percentage changes among 96 metropolitan markets with a look at each of the three key performance metrics: occupancy, average daily rate (ADR) and revenue per available room (RevPAR). Of note, the locations considered for our top 10 lists have excluded 71 “non-urbanized” STR markets covering broad geographic regions such as entire states (ex: Alaska) or broad regions (ex: Georgia North). A total of 25 distinct markets appear on the end-of-year top 10 lists.
- With some exceptions, the top 10 lists largely consist of markets whose performance most drastically fell during the pandemic and who likewise had room for growth normalization.
- Top 25 Markets have a large footprint among the year’s most positive changing markets, including New York City, Las Vegas, Washington, D.C.; Boston and Houston.
