STR Weekly Insights: 19-25 February 2023

Countries included: United States, United Arab Emirates, Puerto Rico, Singapore, Barbados, United Kingdom, Japan, and Mexico

U.S. performance

Hotel occupancy continued a seasonal rise, reaching 64.2% for the week ending 25 February. That level was up 2.2 percentage points (ppts) year over year (YoY). Room demand (24.9 million) was the highest ever for the week containing the Presidents’ Day holiday and the highest level of the year thus far, powered by week-on-week demand growth for each of the weekdays (Sunday-Thursday). Tuesday through Thursday occupancy was particularly strong at 64.6%, which was also the highest for those three days thus far in 2023.

Full-week average daily rate (ADR) increased 7.9% YoY to US$157 with revenue per available room (RevPAR) growing 11.8% YoY to US$100, which was the first time at that level since early November. Inflation-adjusted (real) ADR and RevPAR were both above the level seen in the comparable week of 2019.

As forecasted, the year-over-year growth rate for ADR and RevPAR has continued to trend down. YoY RevPAR growth is anticipated to average 11% over the next eight weeks as compared to 23% in the first eight weeks of the year. A further growth slowdown is predicted for the following eight-week period (~+7%) with higher calendar comps.

Occupancy for the Presidents’ Day three-day weekend (17-19 February) was 68.8%, the fourth highest of the past 24 years. In 2015, occupancy reached 70.9% with room demand of 10.7 million. This year, room demand was 11.4 million, the most for any Presidents’ Day three-day weekend. The Florida Keys led the nation during the holiday weekend with occupancy of 91.1%, followed by Orlando, Daytona Beach, and Sarasota, which were at 91.0%. In total, 28 of the 167 STR-defined U.S. markets had occupancy above 80% during the holiday weekend. While occupancy was high, year-over-year growth was somewhat low, increasing 0.4ppts from the holiday weekend a year ago. ADR increased 8.2% YoY to US$171 and resulted in RevPAR of US$118 (+8.9% YoY). Both ADR and RevPAR were the highest ever recorded for the holiday weekend as were both real measures. Thirty-eight markets saw holiday weekend ADR surpass the rate of inflation.

The weekend after the holiday (24-25 February) slowed as compared the previous one but remained above 70% for a second straight week, down slightly versus a year ago (-0.2ppts). Occupancy was above 90% in seven markets, all in Florida. In total, more than a quarter of all markets had weekend occupancy above 75%. Weekend ADR growth dipped to 4.1% YoY, its lowest increase of the past eight weeks, but normal versus other years for the same weekend.

Accounting for the holiday, weekday (Tuesday -Thursday) occupancy advanced 4.4ppts YoY, led by the Top 25 Markets where occupancy hit 71.5%, up 8.3ppts YoY. At the same time, occupancy for the remaining markets gained 2.3ppts to 60.9%. Five of the Top 25 Markets reported weekday occupancy above 80%, led by Tampa (90%) and including Phoenix, Orlando, Miami and Oahu. Occupancy in New York City grew 18.9ppts YoY to 76.4% on those three days, which was the market’s highest Tuesday-Thursday level of the year. All Top 25 Markets saw weekday occupancy growth except for this week’s leader, Tampa, which was flat (-0.1ppts YoY), and Miami (-3.2ppts YoY). ADR growth for the three days was also substantial for the Top 25, up 14.8% YoY to US$179 with RevPAR rising 29.8% to US$128. For the total week, Top 25 Market RevPAR increased 19.5% to US$128, the highest level since mid-November and equal to what was seen during the non-holiday weekdays.

Upper-tier (Luxury, Upper Upscale and Upscale) hotels fared the best, led by Upscale (71.0%), Upper Upscale (69.4%) and Luxury (68.0%). Weekday occupancy (Tuesday-Thursday) was stronger with Upscale at 73.6% and the other two upper-tier chain scales above 70%. ADR on those days increased the most among Upscale hotels (12.6% YoY) with the measure up 9.8% in Upper Upscale. Luxury hotels saw ADR fall 1.9% YoY Tuesday through Thursday. Luxury ADR was also down for the full week and has fallen for six straight weeks.

Global Performance

Global hotel occupancy (excluding the U.S.) continued to climb, reaching a 22-week high of 66.1%, up 14.4ppts from a year ago. The level was also the eight highest since the start of the pandemic. ADR increased 23.6% YoY to US$132 with RevPAR up 58.1% YoY to US$87.

The United Arab Emirates led the world with hotel occupancy of 91.8% in the week, which was its highest weekly level of the past four years due. The Emirates received a demand boost while hosting the annual Gulf Food 2023, the world’s largest annual food event, and IDEX 2023, a biennial international defense exhibition and conference. Occupancy in Dubai, which held Gulf Food, reached 94.3%, the second highest of any market this week, behind Turks & Caicos. UAE ADR grew 22.6% YoY with RevPAR up slightly more.

Occupancy was also strong in Puerto Rico (89.2%), Singapore (84.8%) and Barbados (84.6%). Overall, the Middle East and Caribbean had the highest occupancy of all continents, both above 80%.

Among the 10 largest countries by hotel supply, the United Kingdom reported the highest occupancy (74.4%) followed by Japan (71.7%) and Mexico (71.4%). China reached another high this week with occupancy at 69%, a level not seen since July 2021. Overall, all top 10 countries saw year-over-year occupancy gains with aggregate occupancy up 15.1ppts to 67.6%. Top 10 ADR increased 18.5% YoY to US$118, and RevPAR grew 52.6% to US$80.

Final thoughts

RevPAR growth rates in the U.S. continued to trend down as easy Omicron comps from last year fade. However, Top 25 Markets are seeing solid growth and performance that is more in line with what we expect. There is still a gap in the Top 25 Markets to the levels seen prior to the pandemic, but it is shrinking. Outside the U.S., growth has remained fairly consistent and has been in high double-digits for some time.

Looking ahead

In the week ending 4 March 2023, U.S. RevPAR will dip week over week from the drag of a non-holiday weekend Sunday, but RevPAR is expected to be robust YoY with double-digit growth. With China’s performance gathering strength, along with increasing demand in other key counties, RevPAR growth outside the U.S. will likely see strong double-digit increases for the foreseeable future.