STR Weekly Insights: 1-7 December 2024

Highlights

• Cold start, hot ending to the first week of December
• New York City led the nation, by a mile, in absolute RevPAR
• Hurricane-affected markets continued to see increases
• Group demand unstoppable
• Robust global growth continued for the ninth consecutive week 

Strong finish to the week after Thanksgiving impact subsided

The U.S. hotel industry reported solid performance during the week ending 7 December 2024, lifted entirely by the second half of the week. Revenue per available room (RevPAR) over the first three days of the week, coming off the Thanksgiving weekend, produced negative year-over-year comparisons. On the flip side, the last three days of the week produced significant RevPAR gains. 

Sunday RevPAR was down by double-digits, while Monday and Tuesday decreased at a lesser pace. By Wednesday, RevPAR improved, and the following three days produced double-digit gains. This was not unexpected as the same pattern occurred in 2019, which followed a similar calendar. We also believe the compressed period between Thanksgiving and Christmas this year is helping to fuel performance.

Overall, U.S. hotel RevPAR increased 4.3% with average daily rate (ADR) entirely responsible for the growth, up 3.8%. Occupancy barely moved, up 0.3 percentage points (ppts) compared to the same week last year. RevPAR on Sunday through Tuesday declined 7.1% on falling occupancy (-3.3ppts) and ADR (-1.2%). Wednesday improved, with RevPAR up 7.9%, lifted by ADR (+6.1%). However, Thursday through Saturday ruled the week as RevPAR increased 12.8% on nearly equal gains in ADR and occupancy. This pattern played out across all markets.

Eight of the Top 25 Markets posted double-digit RevPAR gains, impacted by events and football games (college conference championships and the NFL). Chicago posted the largest RevPAR gain (+42.9%), propelled by the calendar shift of the Radiological Society of North America (RSNA) conference from a week earlier in 2023. Las Vegas saw RevPAR grow 36.7% due to the AWS (Amazon Web Services) conference and the start of the Rodeo Convention and Cowboy Christmas. 

St. Louis (+20.2%), Philadelphia (+17.1%) and Seattle (+15.5%) all recorded strong RevPAR gains, starting Wednesday and flowing into the weekend, impacted by strong event calendars as well as football. Minneapolis (+15.3%) and Detroit (+15.2%) rounded out the double-digit list with strong weekends boosted by football and events. 

Tampa also saw positive RevPAR gains all week (+28.2%) driven by the continuing Hurricane Milton recovery efforts. Storm recovery also lifted performance in six other markets, including Augusta, Columbia, Florida Central South, Greenville/Spartanburg, North Carolina West, and Sarasota.

For the past six weeks, New York City has led the nation in occupancy, and this past week was no exception (89.9%). The city also led the nation in absolute RevPAR ($457), up 6.7%, eclipsing the next highest RevPAR market (Miami) by nearly $200 even though it was hosting Art Basel. The week’s RevPAR in New York was the second highest of the year, behind the week ending 28 September when it reached $487 during the UN General Assembly.

All chain scales improved following the cold start and hot finish for the week

For only the eighth time this year, RevPAR increased for all chains scales. Like in the previous week, Economy hotels led in RevPAR, posting growth every day of the week, partially a result of the Hurricane Helene and Hurricane Milton recovery efforts, which has a much greater impact on hotels in the lower classes. Even without the seven hurricane markets, Economy hotels still saw positive weekly RevPAR growth.  

ADR dominated the gains for all chains scales with low to no occupancy gains for all chains scale except Economy. Once the Thanksgiving lull of the first three days passed, the last four days of the week produced a return to the bifurcated patterns seen for much of the year with mid-teen RevPAR gains in the top two chains scales while gains for the rest of the chain scales hovered around a healthy 10%.

Group demand is unstoppable after the Thanksgiving lull

Group demand among Luxury and Upper Upscale hotels grew 0.7%, which is notable given the weakness during the first three days of the week. Compared to 2019, which followed a similar calendar, group demand was just 75,000 rooms shy of 2019 levels. For the last four days of the week (Wednesday – Saturday), group demand rose 17.9% compared to last year reflecting the continuation of strong group demand seen for most of the year. Group ADR for the week increased 6.2%. Of the Top 25 Markets that saw double-digit RevPAR gains, all but Tampa saw significant group occupancy increases. 
Transient demand declined 1.3%, while ADR grew 5.6%, and both had the same pattern as group but at more muted levels. The last four days for transient business was positive with demand up 1.5% and ADR up 8.3%.

Non-stop global growth continued; impact of China’s economic stimulus TBD

Global RevPAR, excluding the U.S., advanced 9.1% and has been holding close to this level for the past nine weeks, which is above the YTD RevPAR growth level (+6.8%). ADR continued to be the primary driver, advancing 7.6% while occupancy increased less than one percentage point to 67.1%. Across the largest countries in terms of room supply:

• Japan continued to post robust RevPAR, increasing 26.6% entirely on ADR (+26.7%) with Kyoto (RevPAR: +62.4%) and Tokyo (RevPAR: +43.1%) posting the largest gains. All  but two of the 11 Japanese markets recorded double-digit RevPAR growth. 
• Canada took second place with RevPAR rising 24%, lifted by the final concerts of Taylor Swift’s Eras Tour in Vancouver. RevPAR in Vancouver increased 145.1% with ADR rising 125.2% to USD$350. Weekend ADR increased 283.7% to USD$625. The market’s data for the week ending 14 December will also show solid gains given that the final concert of the entire tour was on Sunday, 8 December. 
• RevPAR in Mexico rose 17.3% on the heels of the prior week’s 41.8% increase. All but three of the 12 markets saw double-digit RevPAR growth, led by Yucatan/Campeche (+42%) and Baja (+37.6%).
• France followed with a healthy 16.8% RevPAR increase with the Paris market posting a 21.5% RevPAR increase lifted by the reopening of Notre Dame Cathedral. 
• China posted a modest RevPAR decline of 1.7% due mostly to following ADR. Six of the of the 10 largest markets, based on supply and which accounts for almost half of the available rooms, saw RevPAR growth with the measure rising 9.5% in Shanghai.   

Final Thoughts

December is off to a strong start as expected due to the compressed period between Thanksgiving and Christmas. AAA projects a record number of holiday travelers to close out 2024. However, our holiday forecast calls for modest growth due to the movement of Christmas and New Years to Wednesday from Monday a year ago. We were wrong with our Thanksgiving forecast, and we would be happy to be wrong again. 

Looking further ahead, occupancy on the books in January shows net positive. February is flat, and March is showing higher YoY levels because the Easter and Passover observances occur in April next year. Global performance seems unstoppable and is expected to continue growing RevPAR through ADR for the foreseeable future.