STR Weekly Insights: 12-18 January 2025

Analysis by Isaac Collazo, Chris Klauda

All financial figures in constant USD. 

Highlights

• U.S. hotels rebound post-holiday lull
• Most of L.A. area elevated with wildfire displacement demand, tourist-heavy areas down
• Hurricane markets still lifting demand, especially in the lower-tier scales
• Global RevPAR up on ADR, Japanese hotels still leading
• Mexico continues growth run 

Performance boost on positive side of calendar shift

U.S. hotel revenue per available room (RevPAR) made a comeback for the week ending 18 January 2025, rising 17.2% year over year after a 13.1% slide in the week prior. Occupancy, up 3.2 percentage points (ppts), and average daily rate (ADR) up 5.1%, each contributed with impacts from the MLK holiday weekend calendar shift, the return of conference and events (i.e. San Franscisco), and the Presidential Inauguration weekend in D.C.

Making up for the previous week when the Top 25 Markets saw the largest decline, this most recent period was all about the major markets with RevPAR advancing 26.6%. San Francisco led the way with a whopping +348.3% RevPAR gain due to the calendar shift of the J.P. Morgan Healthcare Conference, which occurred a week earlier last year. Excluding San Francisco, RevPAR in the Top 25 Markets was still up double-digits (+17.9%), the result of occupancy and ADR gains. Washington, D.C. posted the second highest RevPAR increase, up 83.9% for the week leading up to the Presidential Inauguration with weekend RevPAR rising 224.4%, driven primarily by ADR (+142.8%).

Across the country, weekends (Friday & Saturday) showed the largest RevPAR increases (+25.2%), driven in part by the MLK holiday. This was followed closely by weekdays (Monday-Wednesday), up 23.4%. Shoulder days (Sunday and Thursday) were essentially flat (-0.7%). This pattern was seen in both the Top 25 Markets and the rest of the country. Even when excluding the strong weekday performance of San Francisco, and the weekend in Washington, D.C., the Top 25 Markets saw strong weekend and weekday performance. 

With all that said, it was a good week for hotel industry across the U.S. as 2025 travel began in earnest after the holiday hangover.

Hurricane displacement demand remains a factor

RevPAR in the 13 markets affected by either Hurricane Helene or Hurricane Milton continued to see elevated performance with RevPAR up 13.9% on occupancy (+11.1ppts) and ADR growth (+10.2%). The highest weekly RevPAR increase was seen in Greenville/Spartanburg (+72.6%) with 12 of the 13 markets seeing double-digit growth. Overall, these markets have seen double-digit RevPAR gains in all but one week since the week after Hurricane Helene’s landfall.

Gains across the chain scales

All chain scales benefitted from the strong week with RevPAR gains ranging from a high of +37.7% for Luxury to +6.4% in Economy. Luxury received an extra lift from San Francisco’s strong week. while Midscale and Economy chains continued to see strong performance from the 13 markets impacted by Hurricane Helene and Hurricane Milton. Excluding San Francisco and the hurricane markets, the chain scale KPIs reveals a similar yet more muted pattern with a RevPAR range of +24.9 % in Luxury to +1.1% in Economy.

Wildfire impact around Los Angeles

Demand in the greater Los Angeles area (STR-defined markets: Los Angeles, California Central Coast, Inland Empire, and Orange County) remained elevated, up 7.5% from January 7-18. In absolute values, occupancy since 7 January averaged 65.5% versus 61.2% a year ago. Several submarkets, however, are seeing sharp gains, including Pasadena/Glendale/Burbank, where demand is up 33.6% since the start of the wildfires with double-digit gains nearly every day. 

Others with double-digit gains include Los Angeles East (between Pasadena and San Bernardino), Oxnard/Ventura, Los Angeles North (San Fernando Valley), Palm Springs, Santa Barbara, Newport Beach/Dana Point, Riverside/Sab Bernardino, and others. On average, occupancy is running 10 points higher in those submarkets than a year ago.

On the flip side, over the past 12 days, demand is down in Los Angeles Downtown (-7.7%) and Hollywood/Beverly Hills (-15.8%). Although the weekend was positive for downtown hotels. 

Overall, RevPAR in the greater LA area is up 9.3% since the start of the fires, led mostly by occupancy gains with a few exceptions. Of the 24 submarkets in greater Los Angeles, five have seen negative RevPAR changes since the fires began: Disneyland (-19.1%), Los Angeles CBD (-8.2), Anaheim (-3.8%), Los Angeles Airport (-3.6%) and Orange County Northwest (-2.2). For the week ending 18 January, nine submarkets were reporting negative RevPAR comparisons with tourist areas seeing the largest decreases.

Group demand returned to the Top 25 Markets

Across Luxury and Upper Upscale hotels, group occupancy was up 4.0% from the same week last year with the Top 25 Markets recording an increase of 5.6%. Twenty-two of the Top 25 Markets posted group occupancy increases. ADR advanced 29.8% across the Top 25 Markets, boosted by San Francisco’s Group ADR, which soared to $1,342 (+391.9%).  Transient occupancy also recovered (+2.1 ppts) after last week’s decrease (-2.5 ppts). Markets outside the Top 25 posted stronger performance (+2.6ppts) while the Top 25 increased 1.6 ppts in occupancy. 

Global performance mixed 

Across the globe, excluding the U.S., weekly RevPAR increased 8.1%, driven entirely by ADR gains as has been the case for the past 12 months.

• Japan once again posted the largest RevPAR gain (+34.7%), with all 11 STR-defined markets seeing growth. ADR continues to be the main driver of this growth, which is fueled in part by the weaker yen 
• Since the U.S. Thanksgiving holiday, Mexico has continued to see strong performance, as RevPAR increased 22.5% this week. The Mexican Caribbean again saw the largest gain of any market in the region. Similar to what we are seeing in Japan, ADR is driving the growth, which is likely due to weakening of the peso to the dollar. Demand for the country was down for a second consecutive week.
• Germany rebounded after a decline the prior week with RevPAR rising 18.5% on ADR. Munich was by far the top performing market (RevPAR: +163.5%) due in part to the shift of the Digital Life Design conference. 
• Indonesia posted double-digit RevPAR growth lifted by three of the four largest markets in the country: Bali (+18.5%), Jakarta (+12.8%) and East Java (+10.6%).
• Italy rounded out the list of key markets posting double-digit RevPAR growth (+10.8%) with gains seen across 12 of 14 markets. 
• China’s performance was flat with its top two markets, Shanghai and Beijing, recording RevPAR gains.

Final Thoughts

We expected this week to be better than last and it certainly was. Next week’s data should show another slowdown due to the MLK holiday this past Monday (20 January). Occupancy on the books for next week reflects this slowdown with the measure down 2.3 ppts in the top markets compared with the same week last year. Remember that the holiday was a week later this year (calendar shift). 

Washington D.C, hosting the Presidential Inauguration, is one market that will see a boost. The Los Angeles fires will continue to impact the market and surrounding areas. Displaced residents and recovery workers will continue to fill hotels around the greater Los Angeles area. However, some submarkets like Los Angeles CBD, Hollywood/Beverly Hills, Disneyland, and other tourist areas will likely see a short-term decrease in demand. 

Globally, hotels in Japan, Mexico and Indonesia are expected to see ADR-driven RevPAR, due in part to their weak currencies. Countries in Europe should see a return to normal business patterns which will produce more stable performance.