STR Weekly Insights: 9-15 March 2025

Analysis by Isaac Collazo, Chris Klauda

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

Highlights

• Down week, flat weekend in the U.S.
• Event shifts impact many Top 25 Markets
• U.S. border hotels mostly trending downward
• Rest of globe doing well

Lackluster week due to conference shifts and later spring break

The U.S. hotel industry stepped back in the week ending 15 March 2025 as revenue per available room (RevPAR) dropped 4.2% year over year. The decline was almost entirely due to occupancy, which fell 2.3 percentage point (ppts), while average daily rate (ADR) decreased a modest 0.7%. Occupancy has decreased in 13 of the past 14 days with 15 March the only day with an increase. A similar pattern was seen in the same two weeks last year although the two-week decrease is a percentage point less this year as ADR comps have been slightly positive. 

Taking the biggest hit were the two shoulder days (Sunday and Thursday), when RevPAR fell more than 7%. Weekdays (Monday – Wednesday) were only slightly less negative (-4.9%). The weekend was almost flat (-0.2%) with Friday’s RevPAR decline (-2.5%) almost erased by Saturday’s increase (+2.0%). This pattern was more pronounced for shoulder and weekends in the Top 25 Markets with shoulder days down 10.4% and the weekend up 0.8%. The decrease in Top 25 weekday RevPAR was similar to the industry average. 

We do not attribute the sharp decrease to a lone factor. There were several conference calendar shifts across the Top 25 Markets. In addition, spring break is later for K-12 students and families due to the later start of school after the winter holidays and the year-over-year shift in the Easter calendar. A year ago, a quarter of all K-12 schools were on Spring Break based on STR’s School Breaks Report. This year, only 14% were on holiday. The largest percentage of schools (24%) are on break during the week ending 22 March and the week of Easter (20%). We also noted that holidays were more spread out this year than last year between the two months. Last year, more than 91% of students had completed their spring break by the week ending 6 April. This year, only 64% will have done so.

Hotels were not alone in seeing a decrease in demand as TSA screening volumes were down 0.9% compared to last year. Adding credence to the later Spring Break hypothesis, air travel has been down the past three weeks. 

We also can not underestimate the impact of increased uncertainty on consumers. Falling consumer sentiment was highlighted in a recent statement from Federal Reserve Chairman, Jerome Powell. This headwind could impact hotels as they head into the peak leisure travel season.

Conferences and events impact markets in both directions

Houston, with its annual Rodeo, posted a double-digit RevPAR gain (+16%), as did San Francisco (+10.6%), which hosted the CROI healthcare conference. High performing weekend Top 25 Markets included Boston and St. Louis, celebrating St. Patrick’s Day with some of the largest parades in the country. Weekend RevPAR increased 32.8% in Boston and 21.2% in St. Louis. The latter also benefitted from strong group demand.

On the flip side, Anaheim (Orange County) saw a significant decrease due to the calendar shift of the Natural Products conference that took place last week. Three other markets recorded significant RevPAR declines due to event shifts, including Seattle, which held the Aerospace & Defense Suppliers Summit (A&DSS) earlier this month. Other notable decreases occurred in Minneapolis and Orlando. The former held the Big 10 Women’s Basketball Championship last year, and the latter saw the Gartner Data and Analytics conference move into the first part of the month.

Declining occupancy produced negative chain scale RevPAR across the board

The sharpest declines were seen in the middle four tiers with Upscale hotels posting the largest RevPAR drop (-5.2%) and the other three ranging from -4.2% to -4.4%. Occupancy was the primary driver of the decline across all chain scales. RevPAR in Luxury hotels was only slightly negative (-0.6%) lifted by strong ADR gains. Economy hotels reported the second smallest RevPAR decline at -2.7%. Economy hotels continued to benefit from hotels in the 13 markets impacted by last year’s hurricanes. Excluding those markets, RevPAR in Economy hotels was down 4.4%. The same is true for Midscale hotels, but to a lesser extent.

Non-Top 25 Markets responsible for a group demand slowdown, while Top 25 caused the transient slowdown

Group demand in Luxury and Upper Upscale hotels decreased for the second consecutive week, down 1.7%, while ADR rose 3.7%. Markets outside the Top 25 drove the decline, falling 1.5% while the Top 25 Markets saw group demand increase 1.4%. ADR was healthy in the Top 25 Markets, increasing 5.7%, while the rest of the country saw ADR increase 2.3%. Detroit, New Orleans, St Louis, San Francisco, and Philadelphia all saw robust group performance with demand up over 20% along with strong ADR gains for all except New Orleans.

Transient demand and ADR declined 3.8% and 1.4%, respectively. The Top 25 Markets saw a larger decline (-5.8%) versus the remainder of the country (-3.6%). ADR decreases were more modest at -1.7% and -1.3%, respectively. Only three of the Top 25 Markets saw strong transient demand:  Houston (+19.9%), Nashville (+6.5%) and Dallas (+5.8%).

U.S. border flows

Over the past week there has been a more pronounced demand decline across hotels on both the Canadian and Mexico borders. A similar decline was seen over the past two weeks, however the most week was the sharpest since we began monitoring those hotels.

• Of the 1,306 hotels within 50 miles of the Canadian border, demand was down 4.8%. The prior two weeks were down 1.9% and 2.6%. Demand across the U.S. was also down this week but not as much as seen in U.S. hotels near the Canadian border.
• Of the 916 hotels within 50 miles of the Mexican border, demand was down 3% this week. The prior two weeks saw the measure fall 4.2% and 0.3%, respectively. 

Note, we are not attributing these decreases in demand solely to any U.S. policy changes. Some border towns are seeing increases in demand due to the deployment of officers and troops. We will continue to monitor these hotels in the weeks and months to come.

Global occupancy continues to slow while ADR remains strong

Global occupancy, excluding the U.S., fell 1.2ppts compared to last year with the measure at 64.1%. ADR rose 5.3%, netting a RevPAR gain of 3.3%, the highest gain of the past three weeks. The occupancy day-of-week pattern followed the U.S. with the weakest performance during the shoulder period (-2ppts) followed by weekdays (-1ppts) and weekends (-0.7ppts). ADR was up across all days with the strongest gain seen in shoulder days. 

Occupancy was down in each of the 10 largest countries (ranked based on supply). Mexico (+23.9%) and Japan (+21.5%) continued to see the largest gains, all due to ADR (+23.0%).

Eight of the 14 STR-defined markets in Mexico increased RevPAR, led by strong growth (30%+) in the Mexican Caribbean, Cancun and Baja California. Nine of the 11 markets in Japan posted RevPAR increases led by Tokyo, where the measure was up 41.5% on an ADR gain of 37.6%. All but one Japanese market saw ADR rise, with most seeing double-digit gains. 

Only four of the largest countries saw RevPAR increase this week. Indonesia (+1.9%) and France (+0.3%) accompanied Mexico and Japan, but their gains paled in comparison. Indonesia’s gain was driven by ADR as occupancy dropped. This reflects a shift in the mix of travelers, which is due in part to Ramadan when many Muslim visitors refrain from traveling. 

The top European countries all posted RevPAR declines, impacted in part by a shift in spring holidays. Canada was also down (-2.5%) due to falling occupancy as ADR was up. India (-5.9%) and China (10.9%) saw the largest weekly RevPAR decreases.

Springing ahead?

With spring starting, hotels will have to be patient for the season to bloom, assuming consumers do not wither away. Forward STAR data shows U.S. occupancy on the books improving significantly next week, followed by a decline during the Easter week, due to falling group and business travel. The later spring break will increase leisure travel, while business and group travel may slow. All to say that the next few weeks are predicted to be a bit choppy. Globally, ADR is expected to continue to increase while occupancy flattens.