STR Weekly Insights: 19-25 January 2025

Analysis by Isaac Collazo, Chris Klauda

All financial figures in constant U.S. dollar. 

Highlights

• MLK holiday drove a strong Sunday and weakness thereafter in the U.S. 
• The Presidential Inauguration boosted Washington, D.C.
• College Football Playoff Championship scored for Atlanta
• Wildfire demand lift continues in the L.A. area, downtown and Beverly Hills still lower
• Largest global occupancy decline in 10 months, RevPAR still grew
• Shift in the Chinese New Year calendar softened global performance
• Super Bowl occupancy on the books strong 

U.S. performance softened after MLK holiday

U.S. hotel revenue per available room (RevPAR) flatlined (-0.2%) for the week ending 25 January 2025 due to the MLK holiday, which was a week later this year. The past six weeks have oscillated with RevPAR changes varying by more than 15 percentage points (ppts) each week. The most recent week’s daily performance also included ups and downs, but mostly downs. Sunday produced a RevPAR increase of 34.4% due to the extended holiday weekend, but Monday through Wednesday RevPAR fell 7.4%, and the rest of the week was down 0.6%. 

Two markets were lifted by noteworthy events. Washington D.C. hosted the Presidential Inauguration. D.C.’s Sunday RevPAR increased 561.4% with Monday RevPAR up 256.5%.

Atlanta welcomed the College Football Playoff Championship game, resulting in RevPAR gains of 147.6% and 90.1% for Sunday and Monday, respectively. 

Those two events added 12.7ppts to Sunday RevPAR growth in the U.S. and 8.6ppts to Monday. Without those two markets, Monday’s RevPAR would have been down 16.8%.

Other markets seeing large gains on Sunday were leisure-led and included Gatlinburg/Pigeon Forge, Pennsylvania South, the California Wine Country, and Vermont. In each of those markets, RevPAR growth soared by more than 100%. 

North Carolina West also posted RevPAR growth of more than 100%, however, gains continued throughout the week. The strong Sunday performance indicates leisure business is returning to this market while still seeing long-term demand due to hurricane recovery.  

Hurricane displacement demand shifted due to the holiday

Room demand remained elevated across the 13 markets identified as having been significantly affected by the fall hurricanes. However, this week, only four markets experienced double-digit room demand primarily driven by the calendar comparison to last year when the MLK holiday was a week earlier. We are expecting these markets to begin returning to more normal patterns as the hurricane impact starts to wane.

ADR gains and occupancy declines common across the chain scales

Chain scale performance was atypical this week with all chain scales posting ADR gains and occupancy declines. Much of this was due to Sunday’s impact. RevPAR changes were in the double-digits for all chain scales on Sunday, ranging from +59.9% in Luxury to +7.1% in Economy hotels. Washington D.C. and Atlanta had some impact, but even without those markets, all chain scales saw positive year-over-year percentage changes. 

Removing Sunday from the mix, chain scale RevPAR moderated considerably. The measure remained positive in Luxury (+5.4%) and Economy (+3.2%) with ADR driving the increase. In the remaining chain scales, RevPAR decreased due to occupancy declines, which was not surprising given it was a short week due to the holiday. 

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% between 7-25 January. The two submarkets that are seeing the sharpest gains are Pasadena/Glendale/Burbank and Los Angeles East (between Pasadena and San Bernardino), where demand in the most recent week was up 34.1% and 28.1%, respectively, matching similar demand levels seen last week. 

Four additional submarkets maintained high demand in the last two weeks: Monterey/Salinas, Los Angeles North (San Fernando Valley), Riverside Surrounding and Los Angeles Southeast. Demand in Oxnard/Ventura and Riverside & San Bernardino remained high but softened considerably since the prior week. Three other submarkets—Santa Barbara, Palm Spring, and Newport Beach—have seen demand growth dip down to single digits. 

On the flip side, demand remained down in the Los Angeles CBD (-4.6%) and Hollywood/Beverly Hills (-18.1%). The good news is these declines were less steep than the prior week.  

Overall, RevPAR in the greater LA area is up 6% since the start of the fires, led mostly by occupancy gains with a few exceptions. For the week ending 25 January, RevPAR in the area increased 4.8% due to occupancy gains (+3.7%) as ADR actually declined (-1.0%). Of the 24 submarkets in greater Los Angeles, two continued to see double-digit RevPAR declines: Los Angeles CBD (-10.4%), and Hollywood/Beverly Hills (-14%). Disneyland, which saw steep declines immediately after the fires saw the RevPAR decrease lessen (-1.1%). Santa Monica (-4.8%) and South Bay (-5.4%) also saw RevPAR fall while the rest of the submarkets registered growth for the week.

Group demand slowed by the calendar shift

Across Luxury and Upper Upscale hotels, group demand declined 10.9% year over year following a 21.6% increase in the previous week. ADR rose 8.8% for the week. Both the Top 25 Markets and the rest of the country experienced similar demand declines.

Lunar New Year contributes to steepest global occupancy decline since early 2024 

Across the globe, excluding the U.S., weekly RevPAR increased 7.1%, driven entirely by ADR gains as occupancy declined 3.1ppts. That decrease was the largest around the globe since February 2024, due largely to the shift in the Lunar New Year

• China’s performance softened due to the start of the Lunar New Year, which is two weeks earlier this year compared to last year.
• Japan once again posted the largest RevPAR gain (+34.5%), 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. 
• Mexico also continued to see strong performance, as RevPAR increased 25.2%. Similar to Japan, ADR is driving the growth, which is likely due to a weakened peso against the dollar. Demand for the country was down for a third consecutive week.

Final Thoughts

This week’s slowdown was expected, and we project next week’s data to show improvement. With a clean calendar, we will have a clearer view of what the next few weeks will produce. January is estimated to end with RevPAR growth around 3%. 

Occupancy on the books for the next 90 days (as of 27 January) is generally positive with only a few down days, which bodes well for Q1 performance. With the Super Bowl just around the corner, occupancy on the books for the market is 88% with the CBD/French Quarter at 95%.

The Los Angeles fires will continue to impact the market and surrounding areas, however, the impact seems to be lessening on both the positive and negative sides. Likewise, hurricane recovery, which has boosted markets over recent months, should also start to dissipate. 

Globally, we will be watching occupancy following this week’s decline. Japan, Mexico and Indonesia are expected to see ADR-driven RevPAR growth, due in part to their weak currencies. Countries in Europe should see a return to normal business patterns, which will produce more stable performance.