U.S. Market Recovery Monitor - 22 May 2021

Previous MRM versions: 8 May | 15 May

Week ending 22 May

The leisure-led demand surge marched forward with U.S. industry occupancy hitting 60.3%, surpassing the 60% level for the first time since early March 2020. On a total-room-inventory basis (TRI), which accounts for temporarily closed hotels, occupancy was 57.7%, which was also the highest since the pandemic’s start. More importantly, all key measures (demand, occupancy, ADR and RevPAR) reached a 62-week high, led by the Top 25 Markets, where on average, each hotel sold an additional 15 rooms last week versus the previous week. In total, the industry sold more than 3.3 million rooms each day during the week, a level like November 2019, but 300,000 less than what was sold daily in May 2019.

New York City saw the largest demand gain of the week followed by San Diego and Los Angeles. In total, more than 70% of all markets reported demand improvement for the week. Even with the gain, New York still had a significant gap to its previous performance with total demand less than 50% of what it was in 2019. In addition, New York leads in the number of hotels that remain closed. Nearly one quarter of all closed rooms in the U.S. are in New York City, where TRI occupancy for the week was 41%, the second lowest of all markets behind San Francisco (39%) and below Washington, D.C. (44%) and Boston (45%).

While key cities remained mired in a depressive state, overall performance in the Top 25 was at a 62-week high in demand, occupancy, ADR and RevPAR. Miami and Tampa led the Top 25 with TRI occupancy at 70%+. Nearly half of the Top 25 also reported demand at 80% or higher compared with the same week in 2019. While all key performance measures increased, it is worth noting Top 25 ADR is still down 23% as compared to 2019 with RevPAR off by 43%. Taking a closer look, large hotels (300+ rooms) continued to be a major drag to the industry but particularly to the Top 25. Excluding those large properties (1,600+ hotels), industry weekly occupancy was 62%. Occupancy in the Top 25 sans large hotels was 63%.

Leisure destinations outperformed the industry as they have for the past several months. The Florida Keys and Charleston had TRI occupancy above 80% this week with 11 others at 70%+. Overall, 58% of all hotels reported occupancy above 60% this week, the most since COVID-19 derailed travel in early 2020. Weekday occupancy reached a new pandemic-era high (55%, 53% TRI) with all days growing solidly. Weekend occupancy was slightly lower than last week’s pandemic-era high, but it remained at 73% (70% TRI).

ADR across the industry increased 1.7% week on week. Ten markets reported ADR gains of 10% or more with 65% of all markets reporting weekly ADR improvement.

More than half of all markets are now in “Recovery” or “Peak” RevPAR performance.  “Peak” performance is where weekly RevPAR is higher than what it was for the same week in 2019. Overall during May 16-22, there were 31 markets in that category led by the Florida Keys. There are 60 markets in “Recovery,” meaning weekly RevPAR is between 80% and 100% of what it was in 2019. On the flip side, there are 16 markets in “Depression,” where weekly RevPAR is less than 50% of what it was during the same week in 2019. Key markets in this category include New York, San Francisco, Boston, and Washington, D.C. The number of markets in the “Depression” category is the lowest since the start of the pandemic. Overall, weekly RevPAR for the entire U.S. industry was 71% of 2019’s level, meaning the industry remains in “Recession.”

Occupancy outside the U.S. remained low (31%). The U.K. saw the largest demand gain of the week, up 682,000 room nights as the country reopened. Turkey and Germany also saw solid growth but to a much lesser extent. On a market-level, most markets remained in “Depression” (68%) with only 21% in “Recovery’ or “Peak.”

There is no doubt the anticipated leisure surge is well underway. While we expect that most markets will benefit, some will not, and the gains will likely be uneven from week to week. There are many hurdles to overcome and full financial recovery of the industry is still far into the future, but the return of guests is happy news for all.

About the MRM

When the U.S. hotel industry reached the one-year anniversary of the earliest COVID-19 impact, year-over-year percentage changes became less actionable when analyzing performance recovery. Thus, STR introduced a weekly Market Recovery Monitor that categorizes each STR-defined market based on an indexed comparison with the same time periods in 2019. An index is simply a ratio that divides current performance by the benchmark (2019 data).

For example, during the week ending 6 March 2021, U.S. RevPAR was $48.13. In the comparable week from 2019, RevPAR was $87.75. This produces an index of 54.8 ($48.13/$87.75*100), meaning RevPAR was slightly more than half of what it was in 2019.

We use an index to place each market in one of four categories: depression (index <50), recession (index between 50 and 79.9), recovery (index between 80 and 99.9), and peak (index >=100). Additionally, we highlight other top market performances that contribute to higher levels of recovery across the U.S.