U.S. hotel commentary - November 2024

Analysis by Chris Klauda

Top-Line Metrics (November 2024 vs. November 2023):

• Occupancy: 59.4% (+1.7%)
• Average daily rate (ADR): US$152.70 (+0.9%)
• Revenue per available room (RevPAR): US$90.66 (+2.5%)

Key Points

• Presidential election, calendar shifts impact performance
• All branded chain scales see RevPAR gains again
• Highest supply growth since 2022
• New construction projects decline
• YTD RevPAR growth advances

An unusual month for the hotel industry

The U.S. presidential election, a year-over-year Thanksgiving calendar shift, ongoing hurricane recovery efforts, and an extra weekend all factored into the equation as U.S. revenue per available room (RevPAR) increased 2.5% in November. Like in October, occupancy growth was the main driver as the gain in average daily rate (ADR) was under 1%. Even with the stronger occupancy, the measure remained 2 percentage points (ppts) in arrears versus November 2019. ADR increased 0.9% in the month as compared to 1.7% in October. Keep in mind that inflation is nearly twice as much as the ADR increase, meaning that real ADR (inflation-adjusted) decreased versus 2019. The level of demand generators, calendar shifts and other factors in play made for an unusually noisy month:

• The U.S. presidential election paused hotel performance during the first week of the month with RevPAR down 3.5%. Monday and Tuesday of that week showed double-digit declines. 
• A late Thanksgiving provided an extra, full travel week between the election and the holiday. This was evident through the strong midweek performance seen throughout the month and in the two weeks before Thanksgiving, when group demand exceeded 2019 levels. 
• Markets impacted by Hurricane Helene and Hurricane Milton continued to see elevated demand. The seven hotel markets most impacted by the hurricanes (Augusta, Columbia, Florida Central South, Greenville/Spartanburg, North Carolina West, Sarasota, and Tampa) saw RevPAR rise 30.3% on a 13.5-ppt increase in occupancy and a 6.9% gain in ADR. 
• Excluding markets lifted by hurricane recovery demand, U.S. RevPAR increased 1.8%.
• A favorable calendar, which included an extra Friday/Saturday vs. Wednesday/Thursday last year, boosted performance. 

Adding to this unusual month was a reverse bifurcation among the chain scales as Midscale and Economy RevPAR increased more than 5%, while in Upper Upscale, Upscale and Upper Midscale averaged 2.6% growth. However, the Luxury segment continued to lead at +5.3%. 

Hurricane recovery efforts continue to have a much greater impact on hotels in the lower chain scales. In fact, over the past two months, occupancy has played a greater role than ADR in RevPAR gains, partially due to the occupancy gains in the affected markets. 

November room demand increased 2.2% YoY, marking the sixth gain in the past eight months. Looking back at historical trends, November’s total room demand was the second highest ever for the month. This year’s room demand was 667,000 room nights short of the all-time November record from 2019. Thinking about the data in another way, each U.S. hotel (63,000+) sold 10 less rooms, on average, this November than in 2019. 

Room demand growth was nearly identical between the Top 25 Markets and the rest of the country, and all chain scales posted room demand increases. Supply increased 0.6%, which was largest monthly increase since September 2022.

Chain Scales

Hotel performance remained bifurcated as it has for most of the year with YTD RevPAR for the top three chain scales (Luxury, Upper Upscale & Upscale) up nearly 2% while Midscale stayed flat. Economy and Independents continued to see falling RevPAR YTD. Occupancy lifted Luxury RevPAR, while ADR was the primary driver in the middle four. In the Economy segment, falling ADR and occupancy declines, particularly in the early part of the year, have kept RevPAR comparisons negative although both measures have been positive over the past two months. 

The Northeast had the highest YTD RevPAR growth at 5.5%, led by the Top 25 Markets in that area of the country (+7.7%). RevPAR remained negative YTD in the West with the metric falling 4.4% in November.

Segmentation

Group and Transient demand in Luxury and Upper Upscale hotels remained strong, increasing 2.9% and 2.1% year to date, respectively. 

November group business was slowed by the election at the start of the month. Then, the two weeks between the election and Thanksgiving showed strong group demand, which came in above the same two weeks in 2019. The full month was down more than 6% versus 2019, which was largest deficit of the past seven months. 

December data is expected to show increased group demand due to the shortened time between Thanksgiving and Christmas, creating somewhat of a travel compression. YTD, Group ADR rose 3.5% through November, while Transient ADR was flat. 

Top 25 Markets YTD

RevPAR growth in the Top 25 Markets varied by 20 points from +15.4% in Houston to -4.8% in San Francisco, with hurricane recovery, events and calendar shifts impacting various markets along the way. It is notable to see that market variability was reduced this year, a reflection of a more normal trading environment. In 2023, RevPAR varied by 28 points from +20.3% in Washington, D.C. to -8.2% in Miami.

Pipeline

While the monthly supply increase was the highest since September 2022, the number of rooms under construction declined again for a second consecutive month (-1.7%), but final planning (+6.6%) and planning (+12.1%) continued to grow, albeit at a slower pace. Even with the decrease, there are still more than 154,000 rooms under construction, down from 156,000 a year ago. The two middle tiers (Upper Midscale and Upscale) make up the largest share of under construction rooms (25.7% and 24.0%, respectively). While Luxury ranks among the smallest share of rooms in construction, it is projected for the highest short-term growth when factoring existing supply against rooms in construction.  

Discover the latest insights 

Weekly data for 8-14 December available here.