STR Weekly Insights: 17-23 September 2023

Analysis by Isaac Collazo, Will Anns, and Chris Klauda

Countries included: Curaçao, Fiji, France, Italy, Japan, Mauritius, Serbia, Spain, United Kingdom, and the United States. 

U.S. Performance

The U.S. hotel industry saw a slow start to the week as the final day of the Rosh Hashanah observance held back travel. However, overall occupancy for the week rose to 68.5% from 67.7% in the week prior. As compared to last year, occupancy was down 1.1 percentage points (ppts) due to a Rosh Hashanah calendar shift, with the observance occurring in the week ending 1 October last year. Average daily rate (ADR) rose by its largest amount (+2.9% YoY) of the past 18 weeks, marking the second consecutive week above 2% growth. While the percentage gain was below the most recent inflation rate (3.7%), real ADR (inflation-adjusted) remained above 2019 for a third consecutive week. Revenue per available room (RevPAR) showed a more modest year-over-year gain (+1.2%) given the decrease in occupancy, and unlike ADR, real RevPAR remained below 2019.

With the final day of Rosh Hashanah occurring on Sunday, occupancy on that day showed the largest decrease (-2.7ppts YoY). Monday was also down but at less than a point. Tuesday and Wednesday produced growth with the remaining days falling and Saturday’s decrease nearly echoing Sunday’s (-2.3ppts YoY). Weekend occupancy has fallen for eight consecutive weeks with the largest declines coming from markets outside of the Top 25. Weekday (Monday-Wednesday) occupancy (69.4%) showed no change from the prior week or last year.

Occupancy in the Top 25 Markets rose week over week from 73% to 74.2% but remained down 0.9ppts versus a year ago. Sunday and Monday revealed more significant declines than the overall average, but the remaining days were much better with Saturday’s occupancy flat to last year (80.9%). Weekday occupancy (75.6%) dropped slightly versus the previous week and last year due to the impact of the religious observance.

ADR in the Top 25 Markets increased 2.2% YoY, bookended by New York City (+16.5%) and San Francisco (-33.1%). Six of the Top 25 Markets saw ADR retreat, including Los Angeles, Anaheim, New Orleans, Orlando, and Miami. Given the occupancy decrease, RevPAR in the Top 25 grew just 1%, which was lower than what was seen in the remaining markets (+1.4%) that benefited from higher ADR growth (+3.3%). However, strong weekly RevPAR growth (10%+) was seen in six Top 25 markets, including Boston, Detroit, Houston, Minneapolis, Oahu, and Washington, D.C., but those gains were offset by sharp decreases in Miami, Anaheim, Orlando, and San Francisco.

New York City led the nation with this week’s highest occupancy (90.9%), up 0.8ppts YoY. This was also the city’s best weekly level going back to the start of 2019. The city saw a boost from the General Debate of the 78th Session of the U.N. General Assembly (19-23 September). The final day of the assembly (26 September) will likely impact the data we process next week as well. New York’s ADR rose 16.5% YoY to US$489, which was also the market’s highest weekly level going back to 2019. The same is true when accounting for inflation. New York RevPAR rose by 17.6%.

Weekday occupancy in the Top 25 Markets ranged from 95.1% in New York to 56.6% in New Orleans. Seattle also reported weekday occupancy above 90% with most above 70%. Weekend occupancy was 91% in San Diego and above 80% in 10 other markets.

In the remaining markets, weekday occupancy was strongest in San Jose (87.7%). Three markets in New Jersey (Bergen/Passaic, Central New Jersey, and Newark) were among the best in terms of weekday occupancy with occupancy above 84%. Salt Lake City was also in that league. Louisville, Birmingham and Salt Lake City (hosting FanX, a Comic Convention) were among the leaders in weekend occupancy as all three saw the measure surpass 89%.

Occupancy in the chain scales ranged from 76.8% in Upscale to 57.5% in Economy. The higher-end chain scales (Luxury, Upper Upscale, Upscale and Upper Midscale) all reported occupancy above 72% with Upper Upscale and Upscale posting year-on-year growth. Weekday occupancy also grew and surpassed 80% in both those chain scales. The Economy chain scale continued to see occupancy decreases with the weekly measure down by more than two percentage points in each of the past three weeks.

Group business in Luxury and Upper Upscale hotels produced the highest demand of the year so far and the third highest level since March 2020. The week was led by weekday group demand that was at its second highest level of the past three years.

Weekly RevPAR was up by more than 4% in Upscale hotels. Upper Upscale hotels saw growth of 2.7%, followed by Upper Midscale at 1.8%. All other chain scales posted a fall in RevPAR. Weekday group demand was strongest in Las Vegas, Chicago, Washington, D.C., Orlando, and New York City. New York recorded its second highest group demand going all the way back to the start of 2020. The highest was seen a year ago.

Global Performance

As compared to the week prior, global occupancy (excluding the U.S) grew slightly, up 1.2ppts to 72.1%. There continued to be strong year-over-year growth with the measure up 4.6ppts. ADR showed solid gains, rising 11.8% to US$150, which was the first time above US$150 in the past five weeks. RevPAR growth remained robust, up 19.3% YoY to US$108.

The top 10 countries, based on total supply, saw strong growth, too, with occupancy up 6.4ppts YoY to 74.3%, which was the sixth highest level since March 2020. ADR increased 8.6% YoY to US$144 resulting in RevPAR growth of 18.8% to $US207, which was US$6 lower than the U.S. RevPAR level.

Within the top 10 countries, the United Kingdom posted the highest occupancy at 84.5% (+3.5 ppts YoY), followed by Spain, which grew 2.5ppts YoY to 83.9%. France saw a marginal decline in occupancy (-0.8%) year over year to 76.6%. The country is currently in the “pool” match stages of the Rugby World Cup with the semifinals and finals at the middle/end of October. Italy also saw a small 0.6ppts YoY decline, though it has the third highest occupancy among the top 10 countries at 83.1%. Based on results from 2019 and 2022, and the Ryder Cup being held outside of Rome, Italy’s occupancy should be the highest of the year for the coming week of data before tapering off over the next several weeks. Japan continued to see the highest RevPAR growth among the largest countries, up 59.8% to US$128 due largely to ADR growth (+44.4% up to $170).

Outside of the top 10 countries, Curaçao had the highest occupancy in the Americas (77.4%, +9.4ppts YoY). Fiji led Asia Pacific (83.6%, +1.7ppts YoY). Serbia led Europe and had the highest occupancy of any nation globally (91.5%, +6.3ppts YoY). In Middle East and Africa, Mauritius had the highest occupancy (83.4%, +9ppts YoY).

Final thoughts

Despite the religious observance, weekly results were solid with good pickup on the weekdays, especially among U.S. group business. This continues to point to the ongoing recovery of business travel. We are also watching shoulders days, particularly Sundays, which seem to be more “normal” than they have been over the past two years. Outside of the U.S., performance continued to see a strong rebound with double-digit RevPAR gains.

Looking ahead

U.S. performance will reflect easier comparisons to 2022 in the week ending 30 September given the impact of the Rosh Hashanah observance in the previous year’s data. Yom Kippur 2023 may mitigate some of the gain as it will affect the early part of the week. Indigenous Peoples’ Day/Columbus Day will see some pickup in performance but could be negated depending on the outcome of budget talks and whether there is a U.S. government shutdown. Peak fall occupancy is expected to occur in the week ending 21 October or 28 October. Thereafter, occupancy will trend down to its annual low point. Outside the U.S., performance will continue to strengthen, with double-digit RevPAR growth giving way to more normal rates, depending on the impact of the slowing economy