STR Weekly Insights: 26 January – 1 February 2025

Analysis by Isaac Collazo, Chris Klauda

All financial figures in constant U.S. dollar. 

Highlights

• Robust RevPAR growth with clean calendar
• Group demand returned, topping 2019 levels
• Super Bowl predictions
• Lunar New Year lifted Asian markets
   

Strong performance during an uneventful week, finally

In a week refreshingly absent of calendar shifts, market moving events and weather-related disruptors, U.S. hotel revenue per available room (RevPAR) rose a healthy 4.1% for the period ending 1 February 2025. Growth included contributions from both average daily rate (ADR) and occupancy, up 1.8% and 1.2 percentage points (ppts), respectively. 

Weekdays (Monday-Wednesday) showed the largest RevPAR gain (+8.3%). Shoulder days (Sunday & Thursday) were up 3.2%, but the weekend (Friday & Saturday) fell 1.5%. This pattern was more exaggerated for the Top 25 Markets with weekdays seeing even greater RevPAR gains and the weekend showing a largest decline. 

Averaging the past four weeks revealed an ADR-dominated environment where the measure grew 2.3% and drove RevPAR up 1.7%. The Top 25 Markets led the industry during this time with ADR up 3.2%, driving a RevPAR increase of 3.4%. Outside of these markets, ADR increased 1.3% with basically flat RevPAR (+0.2%).

Bifurcation returns to chain scales; hurricane markets advance Midscale and Economy chains

Bifurcation returned to chain scale performance with RevPAR growth ranging from +8.2% among Luxury hotels to +1.3% for Economy. Occupancy growth drove RevPAR gains in Upper Upscale and Upscale hotels, whereas ADR was the primary driver in Midscale and Economy. Luxury and Upper Midscale hotels saw even increases in occupancy and ADR. 

As has been noted for the past several months, the lingering impact of Hurricane Helene and Hurricane Milton have lifted the industry’s performance, especially in lower-tiered chain scales. This past week was no exception with the previously identified 13 hurricane markets adding 1.3ppts to the industry’s RevPAR gain. Excluding the 13 markets from the chain scales, the impact was almost exclusively in the bottom three (Upper Midscale, Midscale and Economy). The largest difference was seen in Economy, where weekly RevPAR percentage change goes from +1.3% to -2.5%. Midscale RevPAR shifts from +2.5% to -0.6%, and Upper Midscale changes from +3.4% to +2.0%. The top three chain scales, excluding the 13 hurricane markets, moved their results by less than 0.5ppts. This means that the bifurcation among the chain scales is even more pronounced than what the overall results show.

Markets

Across the Top 25 Markets, Minneapolis saw the largest RevPAR gain (+16.7%) due to healthy midweek performance and a strong weekend. Philadelphia (+15.7%) took second place with Sunday’s NFC championship game elevating the week. Overall, it was a good week for most of the Top 25 Markets with 19 showing positive RevPAR.

Across the next 25 markets, double-digit RevPAR increases were seen in six of these markets, led by Kansas City, where the measure rose 31.7%, boosted by Sunday’s AFC Championship game. Charlotte saw strong performance all week, while Indianapolis experienced a significant lift on the weekend as host of the WWE Royal Rumble. Salt Lake City posted strong midweek performance, benefiting from the annual Sundance Film Festival.

Los Angeles

RevPAR remained elevated in the greater Los Angeles area (STR-defined markets: Los Angeles, California Central Coast, Inland Empire, and Orange County), up 8.4% for the week. 

Ten of the 24 submarkets reported double-digit weekly RevPAR gains led by Pasadena/Glendale/Burbank (+53%), Los Angeles East (+37%) and Los Angeles North (+26%). Room demand in these markets was also up by double-digits. The Los Angeles CBD, which had been suffering, saw RevPAR grow 17.5%, mostly through ADR.

From 7 January-1 February, RevPAR in the greater Los Angeles area was up 7.7% on occupancy increases as ADR was mostly flat (+0.9%). RevPAR in Pasadena/Glendale/Burbank was up 48% over the same 28 days followed by Los Angeles East (+38%) and Los Angeles North (+26%). On the opposite end, the measure was down by more than 7% in Disneyland and Hollywood/Beverly Hills. The former was up in the latest week of reporting while the latter was significantly down.

A great week for groups across the country              

Across Luxury and Upper Upscale hotels, group demand increased 7.9% and exceeded 2019 levels by 3.9%. ADR was essentially flat (+0.7%). Strong group gains were seen across the Top 25 Markets (+6.8%) and all others (+7.4%). Eleven of the Top 25 Markets posted double-digit demand gains. ADR gains were only seen outside the Top 25 Markets (+4.8%) impacted by a slow group week in Las Vegas. Excluding Las Vegas, Top 25 Market Group ADR rose 2.8%.

Lunar New Year contributes to strong performance in China

Across the globe, excluding the U.S., weekly RevPAR increased 18.6%, driven entirely by ADR gains as occupancy was flat (+0.2ppts). Lunar New Year, which is celebrated in China and other Asian countries, had a significant impact on performance. China alone added 3ppts to global RevPAR. 

• The calendar shift of the14-day Lunar New Year celebration to a Wednesday start (29 January) compared to last year’s Saturday start (10 February) impacted not only the actual dates but the day of week. The beginning of the week in China saw RevPAR down double-digits until Wednesday when performance turned positive. For the week, China’s RevPAR increased 39.1% with ADR driving the increase as occupancy fell. The decrease in occupancy was seen Sunday through Wednesday. Guangdong, China’s third largest market in room supply, posted RevPAR gains of more than 100%.
• Indonesia also posted significant RevPAR gains with some impact due to the change in the Lailat al Miraj observance that occurred one week earlier this year 26-27 January 2025 compared to 6-7 February 2024. 
• Japan and Mexico continue to see strong RevPAR lifted by ADR and impacted by their weakened currencies against the dollar.
• France posted strong RevPAR performance buoyed by Paris Fashion Week. 

Final Thoughts

Business and group travel drove the week and is expected to drive the week ending 8 February. We anticipate the month of February to be positive as occupancy on the books is nearly three percentage points above last year. Super Bowl weekend is looking good with bookings for the New Orleans markets at 90%, up two percentage points from last week with the CBD/French Quarter at 97%. The 13 hurricane markets and greater Los Angeles will continue to see elevated demand for the foreseeable future. 

Globally, China and Indonesia are expected to see strong performance with the continuation of Chinese New Year. Japan and Mexico are also expected to see ADR-driven RevPAR growth, due in part to their weak currencies.