STR Weekly Insights: 15-21 September 2024

Analysis by Isaac Collazo, Chris Klauda, Will Anns

Countries/markets mentioned: 

• United States: Columbus, Houston, New Orleans, New York City, Oklahoma City, Raleigh/Durham/Chapel Hill, San Francisco
• Global: China (Chengdu, Guangdong), Germany (Berlin, Munich), Mexico (Mexico City) 

Highlights

• Solid growth week for U.S. hotels
• Event calendar shifts impacted San Francisco (positive) and New York City (negative)
• Highest Group room demand since 2019
• Holiday calendars impact markets across the globe

Positive performance in one market offsets negative performance in another

In the week ending 21 September 2024, U.S. hotels saw revenue per available room (RevPAR) rise 2.5% with the bulk of the increase coming from average daily rate (ADR), up 2.0%. More than 60% of the industry’s weekly demand gain came from the Top 25 Markets, where RevPAR increased 3.1% on a slightly higher gain in ADR (+1.9%) than occupancy (+1.2%). RevPAR in all other markets also grew (+2%) via ADR. Industry occupancy increased to 68.9%, the first time above 68% since early-August.

A shift in two major conferences had a significant impact on Top 25 Market performance. San Francisco, which hosted Salesforce’s Dreamforce conference, saw RevPAR rise 71.6%. The conference was a week later this year. 

New York City saw RevPAR fall 14.5% due to the shift in the United Nations’ General Assembly “High-level Week”, which is a week later this year. Sunday through Thursday were totally responsible for New York City’s RevPAR decline, down 24.4%, while weekend RevPAR in New York City increased 20.3% as the UN event began to ramp up. 

Excluding both San Francisco and New York City, the remaining 23 major markets saw even stronger RevPAR growth (+4.2%). Even the industry as a whole would have seen stronger RevPAR (+2.9%) without those two markets.  

Industry room demand increased 0.9% (+253,000 room nights) year over year after falling in the previous two weeks. Weekends (Friday & Saturday) accounted for most of the gain (43%) followed by weekdays (Monday-Wednesday), which made up 39% of the industry’s demand growth. 

It is interesting that those two day categories took different paths to demand growth. Weekend demand growth was led by non-Top 25 Markets, which contributed 84% of the gain in room nights. RevPAR in those markets increased 2.6% with occupancy of 73.6%, up 0.9 percentage points (ppts). Oklahoma City, with the Tennessee and Oklahoma football game in Norman, led the nation with weekend RevPAR rising by more than 100%. Other markets with gridiron gains included Columbus and Raleigh/Durham/Chapel Hill. While not contributing much to new demand, Top 25 weekend performance was also good as RevPAR increased 2% with flat occupancy (79.4%).

Weekdays belonged to the Top 25 Markets, which accounted for 93% of growth. Weekday occupancy in the Top 25 hit 77% with RevPAR growing 4.1%. Houston, Orlando, Boston and Los Angeles all saw double-digit RevPAR gains during the weekdays, which also led to double-digit growth for the full week. Overall, 17 of the Top 25 Markets saw weekly RevPAR gains. 

ADR was also the primary driver across the chain scales

Nearly all chain scales saw RevPAR gains except for Economy, which fell 0.4%--its lowest decrease of the past four weeks. ADR drove RevPAR gains in four chain scales (Upper Upscale, Upscale, Upper Midscale and Midscale), with RevPAR ranging from +2.9% in Upper Upscale to +1.3% in Midscale. Luxury increased RevPAR (+1.5%) due to occupancy gains (+2.9ppts) while ADR declined 2.5%. 

Not surprisingly, Upper Upscale saw the largest weekday RevPAR increase (+4.6%) with occupancy at 81.8%. Upscale weekday occupancy was also strong (81%) with RevPAR advancing 2.5%. Upscale chains also did well on the weekend with an occupancy level just a bit higher than on weekdays (81.1%). However, in terms of RevPAR, weekday RevPAR growth was highest in Luxury (+10.5%) because of ADR (+7.5%).

Record-high Group demand 

Group demand for Luxury and Upscale hotels increased 3.7% YoY, reaching the highest level (2.4 million rooms) since Fall 2019. Group ADR increased 1.8%. 

Some of this growth was due to the conference calendar shift in San Francisco with Group occupancy up 14.8ppts. That was partially muted by the shift in New York City where Group occupancy declined 5.1ppts. The data we process next week will provide a clearer view of Group performance as we move into peak meetings and events season. Weekly Transient demand was up (+1.5%) along with ADR (+1.1%). The Top 25 Markets drove this positive Transient demand while the rest of the country remained flat year over year.

Holiday calendar shifts in Mexico, Germany and China impacted global performance

Global RevPAR rose 5.9%, driven entirely by ADR (+8.6%). While occupancy declined (-1.8ppts), it remained strong at 70.5%. RevPAR in the top 10 largest countries, based on supply, advanced much slower with RevPAR up 2% due to a sharper occupancy decline. The largest decline was in China, where RevPAR fell 15.6%. Performance in China was impacted by the shift in the Mid-Autumn Festival via a 9.7ppts occupancy fall. 

Shifting festival dates also caused a drop in Germany, where RevPAR fell 9.3%. The shift in Oktoberfest, which began on 21 September 21 this year compared to the earlier start of 16 September last year led to a 9% ADR decline. Key markets such as Munich and Berlin were impacted the most, with ADR falling by 32.1% and 14.8% respectively.

Mexico continued significant ADR growth (+25%), resulting in a 23.2% RevPAR gain. Most markets posted RevPAR gains, with the largest in Mexico City (+51%), the result of the numerous celebrations for the Grito de Dolores. 

Looking ahead

U.S. hotels performed as expected with a lift from the Dreamforce calendar shift in San Francisco. As shown in our Forward STAR data, the next batch of data is expected to be even stronger with a significant lift from New York City due to the U.N. General Assembly meeting. We expect the overall month of September to be weak as it has one less weekend compared to last year. 

Early-October will also be soft as the Rosh Hashana observance begins on the evening of Wednesday, 2 October, impacting business and group travel. Global performance is expected to remain strong at a more modest pace as it returns to normal with the impact of shifting holiday calendars continuing to produce week-over-week volatility.