U.S. Market Recovery Monitor - 9 October 2021

Previous MRM versions: 25 September | 02 October

Week ending 9 October

The latest week of data in the U.S. confirms that the previous seven-day period was indeed the lull before the storm. Occupancy for 3-9 October rose 2.2 percentage points to 63.9%, which was the country’s highest level since mid-August. STR’s School Breaks Report showed that first full week of October as the one with the most students out for fall break (22%). As a result, destination locations saw solid gains, especially during the weekend, which is similar to previous leisure travel periods. Demand increased in 70% of the 166 STR-defined markets, led by Orlando, where occupancy advanced 9.3 percentage points week on week. With 47,000 rooms still temporarily closed, U.S. total-room-inventory (TRI) occupancy was a bit less at 61.6% for the week. 

While destination locations saw solid growth, the Top 25 Markets were not left out. Along with Orlando, the big demand gainers were Chicago, New York City, and Los Angeles. New York City room demand topped 521,000 after falling below 500,000 in the previous week. This week also saw the reopening of 2,400+ rooms in the city, but that didn’t hold back occupancy too much as it reached 66% for the week. NYC’s occupancy has been above 65% in five of the past six weeks. Weekend occupancy in the city was propelled to a pandemic high of 82% with room demand at its highest since early 2020 in five of the 10 submarkets, including the three largest. NYC saw occupancy growth throughout the week, except Sunday, with the growth rate accelerating from Wednesday onwards. This growth pattern was also seen across the entire U.S. with weekend occupancy (79%) the highest of the past 10 weeks. Weekday occupancy rebounded to 58% after falling in the previous week and hit levels much like two weeks prior.

More than 64% of all reporting hotels saw occupancy move beyond 60% for the week, the most of the past eight weeks. Forty-five percent of hotels had occupancy above 70% and one quarter were above 80% during the week.

Room demand indexed to 2019 was 92, down 0.3 points from the previous week, which was surprising as the comparable 2019 week included Yom Kippur that should have made for an easier comparison. Taking a broader view, over the past 28 days, room demand indexed to 2019 was 91 and has been above 90 for the past 17 weeks on a moving 28-day basis. At the property-level, 40% of reporting hotels had higher demand this past week than they did in the same week of 2019. Over the past 28 days, 39% of reporting hotels saw 2021 demand surpass their 2019 level.

Average daily rate (ADR) grew by its largest amount of the past 13 weeks, up 2.7%, as 63% of STR-defined markets posted week on week growth. Nearly a quarter of markets saw weekly ADR increase by more than 5%. This week’s ADR was 2.4% higher than what it was in 2019 as 77% of markets reported higher ADR this week than the comparable period in 2019. The percentage of markets with higher ADR this year than in 2019 has been above 70% in 14 of the past 15 weeks. Real (inflation-adjusted) ADR was higher than 2019’s level in 52% of markets this week. More than half of markets have seen real ADR surpass 2019 ADR in 12 of the past 15 weeks.

The growth in occupancy and ADR propelled a 6.1% week-on-week increase in TRI revenue per available room (RevPAR), the largest gain of the past 13 weeks. Indexed to 2019, TRI RevPAR was 90% of its level. Overall, 55% of markets had higher TRI RevPAR this week than in the comparable week of 2019. On a 28-day moving total basis, weekly TRI RevPAR was 87% of 2019’s level. The index has been below 90 for the past three weeks. However, the percentage of markets that are at “peak” (TRI RevPAR Indexed to 2019 above 100) increased to 51% from 46% a week ago. Markets in “recovery” (TRI RevPAR Indexed to 2019 between 80 and 100) remained unchanged at 36%, but there were less markets (11%) in “recession” (TRI RevPAR Indexed to 2019 between 50 and 80). Three markets—San Francisco, San Jose, and New York City—continued to be in the “depression” category (TRI RevPAR Indexed to 2019 below 50). For the week, New York City moved into the “recession” category, but the previous three weeks kept it in the “depression” category on the 28-day basis.

Outside the U.S.

Outside of the U.S., TRI occupancy fell by its largest amount (2.4 percentage points) of the past seven weeks with TRI occupancy at 42%. ADR, however, increased by 3%, which was the first such gain of the past six weeks. Six of the top 10 largest countries, based on supply, saw TRI occupancy go backwards, including China, the U.K., and Canada. China’s occupancy (44%) fell by more than 5 percentage points week on week as the National Day Golden Week holiday period was weaker than expected due to strict pandemic control measures along with some colleges and universities reducing their holidays. 

While still having the highest TRI occupancy of the 10 largest countries, U.K.’s occupancy fell by more than 1.3 percentage points to 62% with decreases in both London and Regional UK. This was the third week of declines. Bigger picture, London is gaining strength and Regional U.K. is starting to slow with the end of the summer holiday period. Looking ahead with Forward STAR  data, October demand is stable for Regional U.K. and there’s good growth in London, which signals it may start to overtake Regional U.K. in terms of recovery. 

Canada saw its TRI occupancy also slide down for a third week to 48%, with most markets seeing declines, including Alberta, where TRI occupancy fell by 10 percentage points to 37%.

Globally, TRI RevPAR for the majority of non-U.S. markets on a 28-day moving average basis remained in either the “depression” (31%) or “recession” (38%) categories with only a slight change from the prior week.

Big Picture

The first full week of October was another week of surprises, but this time for the better. As evidenced last year and through most of this year, leisure travel has not lost its appeal despite pauses from in-person schools, return to office, and increases in COVID-19 cases, which are now abating. While we don’t expect business travel to show anywhere near the strength of leisure travel, we continue to see signs of its return, including stable group and weekday demand, albeit low. However, we are also cognizant that many businesses continue to enforce travel restrictions, which will hold back any meaningful growth in that sector. Nonetheless, the hotel industry continues to outperform expectations and is holding its own despite all the uncertainty that surrounds us.