STR Weekly Insights: 23-29 July 2023

NOTE: STR Weekly Insights will be off during the 15th Annual Hotel Data Conference. The next edition will be published on Friday, 18 August.  

Countries included: United States, United Kingdom, China, Italy, Curacao, Singapore, Ireland, Egypt

Analysis by Chris Klauda and William Anns

U.S. Performance

In the final week of July, U.S. hotel occupancy reached 72.2%, which represented a slight decline of 0.7 percentage points (ppts) from the prior week’s post-pandemic high of 72.9%. Compared to a year ago, occupancy was up 0.4ppts. Occupancy for the same week in 2019 was 77.2%.

Monthly to date through 29 July, occupancy of 69.7% was just a smidge below last year (69.9%).  As we move into August, leisure travel in the U.S. will start to wane with approximately 10% of U.S. K-12 students starting school next week according to STR’s 2023-2024 School Break Report.

Revenue per available room (RevPAR) increased 2.9% year over year (YoY), driven by a 2.3% increase in average daily rate (ADR). That ADR increase was the largest in six weeks.

As has been seen for most of the year, the Top 25 Markets recorded stronger occupancy growth compared to the rest of the country, rising 2.2ppts YoY to 76.4% and matching the previous week’s level, which was the highest since late 2019. Outside the Top 25, occupancy was 70%, which was down slightly YoY (-0.5ppts) and 0.9ppts lower than the prior week.

RevPAR for the Top 25 Markets increased a healthy 5.8%, which was the second highest YoY gain this summer fueled by the above-mentioned strong occupancy and solid ADR increase of 2.8%. For the rest of the country, ADR increased 1.6%, resulting in a 0.9% RevPAR gain.

Weekday (Monday-Wednesday) occupancy produced the strongest YoY occupancy increase (+0.7ppts) across all markets followed by the weekend (Friday and Saturday), which was up 0.4ppts. Shoulder days (Sunday and Thursday) were unchanged YoY.

• The Top 25 Markets dominated weekday occupancy growth, increasing 2.7ppts YoY.
• Weekend occupancy for the Top 25 Markets was also strong, increasing 2.0ppts YoY.  
• Combining the strong Top 25 Market occupancy with equally strong ADR gains resulted in weekday and weekend RevPAR gains of 6.5% and 6.2%, respectively.
• Outside the Top 25, RevPAR increased 1.5% for weekdays and 0.9% for weekends.

Two Top 25 Markets reached significant occupancy levels:

• Oahu led the nation in occupancy at 90.7%, which was its highest level since January 2020 (92.0%).
• Anaheim (Orange County) hit 87%, which was the market’s highest level since August 2019.

Outside the Top 25, Buffalo (86.8%) and Albany (82.2%) each recorded their highest occupancy since January 2019. Over half (55%) of the 167 STR-defined markets posted occupancy above 70%.

Occupancy performance across the six chain scales formed a tidy pattern from high to low with Luxury chains seeing the greatest occupancy increase down to Economy chains seeing the greatest decrease. RevPAR changes were not as tidy.

• While Luxury occupancy was up 3.0ppts YoY to 71.5%, RevPAR was up just 1.5%
• Upper Upscale chains increased occupancy 2.7ppts YoY to 76.2% with RevPAR up 4.8%.
• Upscale chains posted the highest occupancy (78.6%), up 2.4ppts YoY with the greatest RevPAR increase of 5.7%.
• Upper Midscale was closest to the average occupancy for the industry at +0.6ppts to 76%, with RevPAR up 3.0%.
• Midscale occupancy at 69.1% was essentially flat (–0.1ppts YoY) as was RevPAR (+0.1%).
• Economy (61.9% occupancy) continued a trend of declines, down 2ppts in occupancy and 2.6% in RevPAR.

Group demand among Luxury and Upper Upscale hotels, which is generally slow during this time of year, increased 2% compared to the same week last year, demonstrating the continued strength seen for group business in 2023. St. Louis posted exceptional results with a 72.4% increase in group occupancy, impacted by a major religious youth conference with nearly 40,000 attendees.  

Global Performance 

Global occupancy (excluding the U.S) climbed 0.3ppts to 72.8%, resulting in another post-pandemic high and a YoY gain of 5.2ppts. Comparing against pre-pandemic times, the matched week in July 2019 marked the high point of global occupancy at 75.9% (+3.1ppts higher compared to 2023). Global ADR remained over US$150 at US$154, which was up 10.5% YoY with RevPAR of US$111 up 19% YoY.

Occupancy for the top 10 countries based on total supply grew 6.4ppts YoY to 75.2%, which was the third highest level of the year. ADR grew YoY 6.8% to US$142, resulting in RevPAR of US$107 (+16.6% YoY).

• Combined occupancy for countries outside of the top 10 has been climbing throughout the year and produced the highest post-pandemic result of 69% (+3.3ppts YoY).
• Excluding national holidays, China recorded a post-pandemic occupancy high of 76.1%, which was up 10.4ppts YoY as this time in 2022 still had large Chinese cities facing lockdowns and “closed loop” manufacturing.
• The U.K. continued to lead the Top 10 with occupancy at 83.2%, and after the first week of the summer holidays, YoY growth held at +0.8ppts for occupancy and +6% for ADR.
• Italy continued to see some of the largest YoY gains in ADR throughout all of Europe, up 12.3% YoY, likely assisted by boosted transatlantic travel from dollarized countries.

Outside of the Top 10, the top performers in occupancy from each continent were:

• Curacao at 82.1% (-0.2ppts YoY)
• Singapore at 88.9% (+13.3ppts) 
• Ireland at 89% (+1.9ppts)
• Egypt at 72.7% (+1.3ppts)

Final thoughts

While slower than a year ago, U.S. demand has advanced, especially in the Top 25 Markets and on the weekdays. With summer’s end on the horizon, business/group travel will have to advance a bit more to continue the industry’s recovery. Outside the U.S., growth is strong on easier comparisons, which will linger through most of the year.

Looking ahead

The absolute level of U.S. occupancy will begin trending down in the coming weeks, hitting a summer seasonal low in the week containing Labor Day. Then a gradual rise is expected but to a level lower than what we have seen over the summer. Global occupancy will likely reach its peak in the coming weeks and then also trend down as school begins in many parts of the world.