STR Weekly Insights: 24-30 September 2023

Analysis by Isaac Collazo, Will Anns, and Chris Klauda

Countries included: China, Curaçao, Fiji, Indonesia, Ireland, Japan, Mauritius, United Kingdom, and United States. 

U.S. Performance

The U.S. hotel industry closed September with weekly occupancy at 66.7%, up 0.5 percentage points (ppts) compared to last year.  The impact of the Yom Kippur observance (24-25 September) had slightly less of an impact when compared to last year’s Rosh Hashanah observance (25-27 September 2022). Compared to the previous week, occupancy fell 1.8ppts due to the Yom Kippur observance. Average daily rate (ADR) rose by its largest amount (+4.6% YoY) since early May and exceeded the most recent inflation rate (3.7%). Revenue per available room (RevPAR) increased 5.4% YoY, which was also the largest gain in the past 13 weeks.

Taking a closer look at occupancy, the largest week-on-week decreases by day of week occurred on weekdays, which was likely impacted by the Yom Kippur observance (Sunday & Monday). However, every day of the week showed lower occupancy with the least amount of decline occurring over the weekend. The occupancy decreases were more notable in the Top 25 Markets, where occupancy was 2.3ppts lower than a week ago with the largest declines recorded on Monday and Tuesday. On a year-over-year basis, the Top 25 Markets posted solid growth across all days of the week against easier comparisons due to the observance of Rosh Hashanah in the same week of 2022 (Sunday-Tuesday).

Five markets reported occupancy above 80%, led by Portland, ME, Boston, New York City, San Francisco, and Denver. Since March 2020, San Franciso’s occupancy has only been above 80% three times as compared to 38 times for all of 2019.

Among the next 25 largest markets (supply based and excluding large rural markets like Texas East, etc.), weekly occupancy decreased to 66% from 68.4% in the week prior, but like the Top 25, occupancy was up 1.7ppts versus a year ago. Occupancy ranged from 75.1% in Austin to 51.9% in Myrtle Beach, which is in its off season. Several additional markets weekly occupancy above 70%, including Salt Lake City, Raleigh/Durham, Charleston, and San Jose. San Jose has seen occupancy above 70% for the past three weeks, and the market’s most recent weekday occupancy reached 79.2%, down from the mid-80s in the prior fortnight.

San Francisco (88.8%) led the nation with the highest weekday (Monday-Wednesday) occupancy followed by Louisville (88.7%). Solid weekday occupancy was seen in several Top 25 Markets, including Boston, Denver, and New York City, as all were at or above 80% with sizable year-on-year gains. New Orleans hosted Beyonce’s Renaissance tour Wednesday night, boosting occupancy to 74.7%, while posting the lowest weekday occupancy of any of the Top 25 Markets (58.8%).

Demand was up in all chain scales except Midscale, Economy, and Independent hotels. The largest gains were seen in Upper Upscale and Upscale hotels, especially on weekdays. Upscale and Upper Midscale continued to see stronger demand than in 2019 and have done so in all weeks of 2023 except one.

Given the Yom Kippur observance, it wasn’t surprising to see group demand fall week over week (-9.2%), although it increased 8.9% YoY. The absolute level for group demand was still among the highest of the past 14 weeks as well. Weekday group demand has also been relatively strong for the past three weeks.

For the month of September, preliminary results suggest occupancy will have reached 66.3%, down 0.3ppts from September 2022. While down against last year, room demand is anticipated to be the second highest ever recorded for the month of September behind last year. Both Rosh Hashana and Yom Kippur observances occurred in September this year, which slowed September occupancy gains compared to 2022 when the holidays were split between September and October. For the entire month of September, ADR increased 3.5%, while RevPAR increased 3.0%. These are the highest gains since May.

Global Performance

Global occupancy, excluding the U.S, fell 3.1ppts week on week to 69.0%. This is similar to the decrease seen in the same week of 2019 (-2.6ppts). As compared to last year, occupancy was up 4.6ppts, which was the same as a week prior. ADR climbed to US$159, up 18.5% YoY. RevPAR grew 26.9% to US$109 up 26.9%.

While occupancy for the top 10 countries, based on supply, also fell slightly week over week, down 5.6ppts to 68.7%. ADR for the same countries increased US$12 to US$155, which was the highest result since the last week of June this year. On a year-on-year basis, occupancy was up 4.3ppts, ADR 18.6% and RevPAR 26.5%.

All countries within the top 10 saw year-over-year occupancy gains, with the largest growth seen in Japan, up 8.6ppts to 74.2%. Japan also continued to report the highest RevPAR growth, up 82.7% to US$119. Part of this boost is likely due to the timing of the Mid-autumn festival, which extended into the weekend. Both China and Indonesia also saw strong RevPAR growth, up 54.4% and 38.9% respectively. Conversely, the United Kingdom, which had the highest occupancy of the top 10 countries (83.8%) was only up just 6.6%.

Outside of the top 10, the highest occupancies in each continent were:

• Curaçao in the Americas (80.1%, +20.9% YoY)
• Fiji in Asia Pacific (86.1%, +3.8ppts YoY)
• Ireland in Europe (88.4%, +2.7ppts)
• Mauritius in the Middle East & Africa (84.1%, +13.9ppts YoY)

Final thoughts

September concluded with solid performance based on increased business and group demand. Weekday occupancy gains in the Top 25 Markets supports that conclusion. Outside of the U.S., performance continued to show strong, double-digit RevPAR gains against easy 2022 comparisons.

Looking ahead

For the week ending 7 October 2023, expect strong year-on-year growth given the inclusion of 2022’s Yom Kippur observance (4-5 October 2022). We also expect to have a relatively strong weekend due to the Indigenous Peoples’/Columbus Day holiday weekend. Overall, we expect occupancy to strengthen in the next three weeks before falling ahead of Halloween.