Excerpt from STR
U.S. hotel industry occupancy topped 70% for the week ending 24 September 2022—an eight-week high. Weekday (Monday-Wednesday) demand and occupancy improved with the measures increasing to the highest levels since the summer.
The Top 25 Markets saw weekday occupancy reach 75.7%, which was the second-best level since the start of the pandemic and the highest non-summer mark. Full-week nominal average daily rate (ADR) increased to US$158, up 1.4% week over week (WoW) and 17.6% from a year ago. Weekly nominal revenue per available room (RevPAR) improved to US$111, a 2.1% WoW gain and 30.3% increase from a year ago. On an inflation-adjusted basis (real), ADR was above 2019 for a second consecutive week whereas RevPAR was just below the value seen three years ago.
Room demand increased as anticipated and surpassed the level seen in the comparable week of 2019 for a second consecutive week. In the previous week, the week-on-week demand gain came almost entirely from weekdays. This week, the growth was in shoulder days (Sunday & Thursday), with most of the increase coming on Sunday, which accounted for 71% of the total week’s growth. The Sunday gain was widespread as 67% of markets saw demand increase that day versus an average of 50% on the remaining days. Weekday demand was relatively flat with gains seen on Monday and slight decreases on Tuesday and Wednesday.
Seventy percent of the week’s demand gains came from the 61 largest markets based on supply, led by Orlando, which accounted for 26% of the week’s total demand gain. Other markets that saw significant weekly gains included Charlotte, Dallas, New York City, and Washington, D.C. On the weekdays and among the Top 25 Markets, demand gains were seen in Anaheim, NYC, Phoenix, and Washington, D.C. New York, which hosted the United Nations General Assembly, and San Francisco with Salesforce’s Dreamforce conference, both saw weekday occupancy top 93%. The latter was the largest group event in San Francisco since the start of the pandemic. Seventeen of the Top 25 Markets saw weekday occupancy at or above 70% with nine markets above 80%.
After achieving a pandemic-era high a week earlier, weekday occupancy in central business districts (CBDs) fell to 78.6% from 79.1%. The New York Financial District, Seattle CBD and Washington, D.C. CBD reported occupancy above 90% with all but five of the 20 CBDs above 70%.
Group demand (all chain scales) was a significant driver of performance again this week, accounting for 32% of the total demand growth week over week. Additionally, Group accounted for nearly all the growth in weekday demand as transient declined week over week. Contract also added a bit to the gain in weekly demand. Looking specifically at the hotels that cater to large group events, Luxury and Upper Upscale hotels, weekday group demand was the highest since the start of the pandemic and ranked 20th all time. Group demand by market increased the most in San Francisco, New York City and Dallas. Chicago and Boston saw significant week-on-week decreases, but both markets retained solid occupancy for the week (81% and 71%, respectively).
With group a major driver of the week’s demand growth, it was not surprising that Upper Upscale had the highest weekday occupancy of any chain scale (79.4%) followed by Upscale (78.2%). Upper Midscale, the largest branded chain scale, saw weekday occupancy surpass 73%. For the full week, four of the seven chain scales (Luxury, Upper Upscale, Upscale and Upper Midscale) had occupancy above 70%. The remaining three were in the 60s with Economy the lowest (62.3%).
The weekend (Friday & Saturday) also produced solid demand growth, making up about a quarter of the week’s demand increase with occupancy rising to 77.3%. Most markets (80%) saw weekend occupancy above 70% with a third reporting the measure at or above 80%. Weekend occupancy has been above 2019 levels in six of the past eight weeks and in 22 of the 39 weeks of the year so far.
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