STR Weekly Insights: 23 February – 1 March 2025

Analysis by Isaac Collazo, Chris Klauda

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

Highlights

• U.S. rollercoaster ride continues 
• Mardi Gras weekend lifted New Orleans
• Warm weather markets post seasonally strong performance
• Political tension pushing demand down in some U.S. border markets
• Fashion Week events impact France and Italy

ADR the sole driver of this week’s rollercoaster ride

U.S. revenue per available room (RevPAR) swung back up 3.1%, following the rollercoaster pattern seen since the start of the year. One difference in the most recent week was that average daily rate (ADR) was the only driver, advancing 2.7% while occupancy was basically flat at -0.2 percentage points (ppts). The previous four “up” weeks were the result of both ADR and occupancy gains. 

Weekdays (Monday – Wednesday) showed the strongest growth, driven by ADR (+3.3%) with a small assist from occupancy (+0.6ppts). Shoulder days (Sunday and Thursday) and the weekend (Friday/Saturday) followed with exclusively ADR-driven RevPAR gains of 2.4% and 2.1%, respectively. 

Recovery from the Los Angeles wildfires as well as Hurricane Helene and Hurricane Milton are three factors that have been contributing to both ADR and occupancy gains, but their impact is starting to diminish. In the case of Los Angeles, the impact is becoming limited to a few submarkets. 

Like in the previous week, most of the Los Angeles wildfire impact was centered in three submarkets (Pasadena/Glendale/Burbank, L.A. North and L.A. East), which have seen elevated demand since the devasting fires began and continue to see elevated performance (RevPAR: +20.9%). The remainder of the greater Los Angeles market saw RevPAR grow a modest 1.9%, partially impacted by the calendar shift of the LA Art show in downtown Los Angeles. The Hollywood/Beverly Hills submarket, which had seen negative RevPAR comps since the fires started, posted a second week of double-digit RevPAR growth (+11.9%). 

The 13 markets still recovering from hurricanes late in 2024 saw RevPAR rise 12.3% following a modest 5.1% gain the previous week. Some of the strength in these markets came from activity unrelated to hurricane recovery, particularly in larger markets like Tampa and Charlotte. However, the impact of recovery efforts remains, and over the past 23 weeks, RevPAR has shown double-digit growth in all but two weeks.

Mardi Gras and the start of spring moved Top 25 Markets

New Orleans earned the top spot this week with RevPAR increasing 30.6%, lifted by the final celebrations of Mardi Gras ahead of Fat Tuesday on 4 March 2025. Last year, Mardi Gras took place on 13 February 2024. Tampa followed with RevPAR growth of 19%, the result of ADR gaining 9.5% and occupancy rising 3.3ppts, boosted in part by the start of Major League Baseball’s spring training season.

Something of a surprise was Las Vegas posting a fifth consecutive week of RevPAR declines. Two weeks of those declines were due to the significant boost the market saw from the Super Bowl last year. Conferences and other event calendar shifts are also driving this slowdown. That said, Las Vegas posted the week’s fourth highest occupancy (82%) and ADR ($235) across all of the Top 25 Markets.  

Tampa, Miami, and Phoenix held the top three occupancy positions heading into the peak spring travel season. For similar reasons, Miami, Oahu and Phoenix landed the top three ADR spots among the Top 25. 

Group shows modest gains and Vegas impact 

Group demand in Luxury and Upper Upscale hotels increased a modest 1.3%, while ADR rose 4.2%. The Top 25 Markets posted a negative group demand comp (-1.2%), impacted by Las Vegas. Excluding Las Vegas, group demand increased 2%. The impact reversed for ADR with the Top 25 Markets increasing 4.3% overall. Excluding Las Vegas, group ADR increased 3.9%.  

Luxury hotels continue to lead

RevPAR for Luxury chain hotels increased 10.7%, which was the largest gain across all the chains scales for the seventh consecutive week. All scales saw RevPAR growth, ranging from +3.9% in Upper Upscale to +1.0% in Economy. This continued the bifurcated growth pattern seen since last year. ADR drove the RevPAR increases across all chain scales. Only in Luxury did occupancy play a significant role (+2.4ppts). 

The other scales saw minimal occupancy changes ranging from +0.5 in Upper Upscale to -0.3 ppts in Economy. The lingering impact of Hurricane Helene and Hurricane Milton continued to drive performance in the lower three tiers. Excluding the 13 hurricane markets, RevPAR change in Economy chains dropped -1.4% after coming in at +1.0% the week prior; Midscale declined to -0.3% from +1.5%; and Upper Midscale moved to +1.1% from +2.1%.

Negative demand movement in some U.S. border markets

Recent rhetoric around tariffs against Canada could likely affect travel flows from Canada to the United States. In the nine submarkets along the Canadian border, hotel room demand declines over the past 28 days (ending 1 March) have been the sharpest in:

• Bellingham/Northwest, WA (-11%)
• Niagara Falls, NY (-7.6%) 
• North Dakota Area (-6.6%)
• Glacier Country, MT (5.9%) 

The other five markets sat within a demand range of -2.9% (Detroit/Dearborn, MI, the largest urban market on the border) to +0.6% (Maine North & Bangor, ME).  

In 12 submarkets along the southern border, three have seen consistent negative demand for the past four weeks with an average decline of -8.9% in Brownsville, TX, -6.2% in McAllen, TX and -4.8% in Texas South Area. A deeper dive will be provided next week examining all border cities to Mexico.

Fashion week impacted market performance in Italy and France

Global occupancy, excluding the U.S., slowed to 64.3%, down 1 percentage points (ppts) while ADR rose 3.4%. China had a role in the decline, but it wasn’t the sole contributor. Excluding China, global occupancy fell 1.6ppts, while ADR rose 5.6%. 

Across the 10 largest countries, based on supply, RevPAR was up by double digits in Italy, Japan, and Mexico. Italy was lifted partly by strong performance in Milan, which held its annual Fashion Week a week later this year. Conversely, France’s negative performance was the result of the calendar shift of Paris Fashion Week. Japan and Mexico both experienced strong performances, mostly driven by ADR growth, which is partly due to FX rates.

Indonesia was impacted by the Ramadan observance slowing travel from Muslim countries. Spain’s negative performance this week was a result of a calendar shift of the annual Mobile World Congress, which is a week later than last year. Germany, in particular, Dusseldorf and Frankfurt, posted significant declines this week, most likely the result of an event calendar change.

It’s finally spring, almost

Spring is just around the corner and spring breaks are starting. It begins in earnest the following week when more than half of all U.S. college students will be on break, according to STR’s School Break Report. This is expected to lift demand in spring break markets. 

March group performance will likely be stronger than last year given that Easter and Passover overlap in April this year. Other items that we are following include the impact of the new administration’s policies on cross-border travel. Also, a tough comparable will be in play in April due last year’s Total Solar Eclipse. The comps for that week are expected to be negative for the U.S. overall, and particularly in markets that were in the path to totality.  

Globally, the U.K. and Europe are also expected to benefit in March from the Easter/Passover shift to April. In the Middle East, the month-long Ramadan observance will slow travel across the region. 

Finally, it’s been a minute since we mentioned Taylor Swift. The impact of her 2024 tour across APAC and Europe will provide challenging comps for host markets throughout 2025 starting with Singapore.

Leap Day 2024 note

Leap Day, which fell on a Thursday last year, was included in weekly comparison to last year. It will not be noticeable in monthly year-over-year reporting as it will be “grossed down” into a 28-day month to allow like-for-like comparisons versus previous years.