STR Weekly Insights: 16-22 February 2025

Analysis by Isaac Collazo, Chris Klauda

All financial figures in U.S. dollar constant currency. 

Highlights

• U.S. weekly RevPAR still a rollercoaster ride
• Hurricane and Top 25 Markets drove RevPAR, again
• China up post-New Year holiday with easy comps
• March bookings look good for the U.S.

The February rollercoaster ride continued

The U.S. hotel industry has been on a rollercoaster ride for the past eight weeks. The week ending 22 February 2025 produced nearly flat (-0.3%) revenue per available room (RevPAR) following a 3.4% increase the previous week, a 2.8% decline the week before that, and a 4.0% gain three weeks ago. Several factors have been driving recent performance, including calendar shifts, the Super Bowl, recovery from the Los Angeles wildfires, and recovery from Hurricane Helene and Hurricane Milton.

Things cleared somewhat this week as the impact of most of these demand drivers lessened, which could be temporary or the start of a trend. Here’s what we saw for the week:

• The 13 hurricane-affected markets from fall 2024 saw RevPAR rise 5.1%, which was the lowest increase since those disasters made landfall. Over the past 22 weeks, the measure has shown double-digit growth in all but two weeks. However, there is no doubt that growth rates are trending down. 
• Three Los Angeles submarkets (Pasadena/Glendale/Burbank, L.A. North and L.A. East), which have seen elevated demand since the devasting fires began, continued to see elevated performance (+24.2% RevPAR). The remainder of the greater Los Angeles market saw strong performance as well with RevPAR up 8.7%. A few call outs: 
  • Hollywood/Beverly Hills submarket, which has seen negative RevPAR comps since the fires, posted RevPAR growth of 9.5%. 
  • RevPAR in Los Angeles CBD rose 47% due in part to the 30^th annual LA Art Show that was a week later this year, making for an easy comparison.
• Las Vegas saw a negative RevPAR change this week due in part to a conference calendar shift. Because Las Vegas represents about 3% of all U.S. hotel supply, large changes in this market have a noticeable impact on national performance. 
• The Top 25 Markets, excluding Las Vegas, Los Angeles, Orange Country and Tampa Bay, produced a 2.1% increase in RevPAR while hotels on “main street” (markets outside the Top 25 and excluding the 13 hurricane markets and two other LA fire impacted markets), saw RevPAR decline (-1.8%). The gap between main street hotels compared to those in the Top 25 Markets has persisted for some time. Over the past four weeks, RevPAR has ranged from +1.7% to -1.3% in these markets. Keep in mind that in all of 2024, these markets only saw RevPAR growth of +0.9%. We will be paying close attention to the main street segment as the industry moves into this year’s spring and peak summer travel seasons as it represents more than 60% of U.S. hotels.
• RevPAR on Presidents’ Day (Monday) and the preceding Sunday was up 3% year over year, boosted by Valentine’s Day on Friday at the start of the holiday weekend. A Valentine’s Friday or Saturday is nearly always a boost for U.S. hotel demand. Presidents’ Day occurred in the same week last year, so the only difference was Valentine’s Day. After the holiday, Tuesday’s RevPAR was flat, with steadily declining RevPAR starting on Wednesday and ending at the weekend close to 3% down.

Group flat overall but up in the Top 25 Markets 

Group demand in Luxury and Upper Upscale hotels decreased 0.8%, while ADR rose 4%. The Top 25 Markets posted solid group demand, up 2.3%, with ADR up 3.9%, led by Philadelphia, Los Angeles, Boston and Nashville. In the remainder of the country, Group demand dropped 4.2%, but ADR grew 3.8%. 

Transient performance was the opposite of Group as the Top 25 Markets saw demand decline 2.3% but ADR increase 2%. In the remaining markets, demand and ADR grew (5.4% and 4.5%, respectively). 

Luxury hotels led

Chain scale RevPAR ranged from +7.2% among Luxury hotels to -2.6% for Upper Midscale hotels. Economy and Upper Midscale hotels followed with RevPAR declines of 2.1% and 1.4%, respectively, while Upper Upscale was flat. Occupancy depressed RevPAR across all chain scales except Luxury while ADR advanced. The lingering impact of Hurricane Helene and Hurricane Milton continued to drive performance in the lower three tiers. Excluding the 13 hurricane markets, chain scale differences were even more pronounced, with RevPAR ranging from +7.8% in Luxury to -3.7% in Economy.

Global RevPAR returned with an occupancy lift from China

Global occupancy, excluding the U.S., reached 67.4%, up 4 percentage points (ppts). Growth was driven by strong gains in China (+11.8ppts) after the New Year holiday and an easy comp to last year’s celebration. Excluding China, global occupancy rose 1.2ppts, producing occupancy of 68.4% – the highest level of the year. 

Across the 10 largest countries, based on supply, RevPAR was up in eight with growth ranging from 24.2% in Mexico to 3.5% in the U.K. China’s RevPAR was entirely due to occupancy gains (+22.2%) while ADR retreated 8.1%. The top nine markets in China all posted double-digit RevPAR gains driven primarily by occupancy. Shanghai saw the greatest growth, lifted by both occupancy (+18.3ppts) and ADR (+10.4%).

Countries across the Middle East experienced strong RevPAR gains in advance of Ramadan, which begins 28 February. The top five Middle East countries (UAE, Saudi Arabia, Qatar, Oman and Jordan) posted RevPAR gains ranging from 6% in Qatar to 28% in the UAE. Occupancy averaged 82.7% across the region. 

Looking good

U.S. forward bookings for the week ending 1 March are above last year’s level. March performance is expected to be stronger than last year as Easter moves to April this year versus March last year. Passover also occurs close to Easter this year, which was not the case last year. This compression of the two observances should benefit conference and group travel, as only one week will be off limits to planners versus two last year. 

Globally, the U.K. and Europe are also expected to benefit from the Easter/Passover shift. In the Middle East, the month-long Ramadan observance will slow travel across the region. China is a wild card.