STR Weekly Insights: July 14-20, 2024

Countries/markets mentioned:

United States: Atlanta, Chicago, Denver, Detroit, Houston, Kansas City, Las Vegas, Minneapolis, New Orleans, Pittsburgh, Salt Lake City
Global: France (Paris), Indonesia (Jakarta, Kalimantan, Bali), Germany (Berlin)

Highlights

US weekly occupancy rate hits highest level since pandemic.
Highest US Weekly RevPAR Ever Recorded
US weekly chamber demand fifth highest since 2000, Group contributed
Impact of technical outage felt in airport hotels and certain markets
Euros pushed Berlin ADR to third highest level ever
Paris ready for the Olympic Games

Strong performance from US hotels even before major technical glitch over the weekend

Performance rebounded in the week ending July 20, 2024, with U.S. revenue per available room (RevPAR) up 11.4% week over week (WoW) and 3.4% year over year (YoY). That growth pushed the metric to its highest weekly level ever ($122.04). However, to temper the excitement, RevPAR was 2.2% below 2019 levels after adjusting for inflation.

The technical outage that occurred on Friday, July 19, had a positive effect on the sector, but performance in the five days before the outage was even better (RevPAR: +4.1% year-on-year).

The industry returned to patterns seen for most of the year, with the Top 25 Markets, Weekdays, and Group driving strong performance. The chain scale bifurcation also continued, with those at the top outperforming those at the bottom. All chain scales except Economy saw RevPAR growth. Economy was flat versus last year, marking the best YoY performance in the segment since the eclipse week in early April.

US hotel occupancy reaches highest level since pandemic

U.S. hotel occupancy reached its highest level (73.5%) since the pandemic began, up 0.7 percentage points (ppts) year-over-year. The last time occupancy exceeded 73% was in the summer of 2019, and it was this week in 2019 that saw the highest occupancy (77.7%) of the year. The highest weekly occupancy ever (79%) was the week ending July 25, 2015. Like 2019, the 2024 occupancy peak has likely been reached, with next week’s level (ending July 27) expected to decline slightly, followed by continued declines as summer draws to a close.

Average daily rate (ADR) rose 2.4%, the best increase in the past three weeks. By comparison, in 2019, when occupancy peaked, ADR rose just 0.8%.

Weekends (Friday-Saturday) continued to have the highest occupancy (79.4%), while weekdays (Monday-Thursday) saw the biggest growth at 73.9%. Weekdays produced the strongest RevPAR gains (+4.5%), lifted by ADR (+3.2%) and occupancy (+0.9ppts). Weekend (Friday-Saturday) RevPAR increased by 1.9%, also driven by ADR (+1.2%) and occupancy (+0.6ppts).

Top 25 markets continue to drive sector performance

RevPAR across the Top 25 Markets increased 4.8% YoY, driven by both occupancy (+2.2ppt) and ADR (+1.8%). Weekday (Monday – Thursday) performance was strongest with RevPAR up 6.0% on occupancy growth (+2.7ppt) slightly stronger than ADR (+2.3%). RevPAR across the rest of the country grew 2.3%, with weekdays seeing the strongest performance (+3.5%). Weekends were up just 0.6%.

Houston posted a strong overall week as it recovers from Hurricane Beryl. Las Vegas, Detroit and New Orleans also experienced double-digit RevPAR gains.

Almost all chain scales increased by ADR and weekdays

ADR drove RevPAR gains across the middle four chain scales, with Upscale seeing the largest RevPAR increase (+4.2%), followed by Upper Upscale (+3.7%), Upper Midscale (+3.3%) and Midscale (+2.1%). Luxury saw RevPAR growth (+0.7%) via occupancy.

Weekday RevPAR ranged from +5.3% at Upscale to +0.2% at Luxury, with all chain scales seeing growth. Luxury chains increased occupancy (+2.9%), which offset a decline in ADR (-2.1%). Sunday saw the strongest RevPAR performance for Luxury chains (+7.1%) with weekdays and weekends up 2.3%. Economy chains’ performance was muted with occupancy up 0.3% and ADR down 0.4%. Changes across dayparts were within one percent of each other.

Group demand returned, fueled by the Top 25 Markets

As usual, group performance in luxury and upscale hotels rebounded this week, driven by the Top 25 markets. Group demand increased by 9.1%, with the Top 25 markets seeing an increase of 14.5%, compared to 5.3% for the rest of the country. Group ADR increased overall by 5.3%, with the Top 25 markets seeing an ADR increase of 5.8%. Seventeen of the Top 25 markets saw group occupancy increase, with four markets – Houston, Las Vegas, Minneapolis and New Orleans – experiencing occupancy increases of 10ppts or more.

Luxury and upper-upscale hotels’ temporary performance improved slightly year-on-year, with demand flat and ADR up 1.2%. Temporary demand was 2.1% above 2019 levels, while group demand was still in deficit (-4.9%).

IT outage impacted airport hotels and several markets

The technical glitch led to stronger weekend results at airport hotels. Weekend occupancy at airports increased by 3.6ppt compared to 0.6ppt for the industry. ADR increased by 2.4% vs. 1.2%, resulting in RevPAR that increased by 6.9% vs. 1.9% for the industry.

Within the Top 25 Markets, Minneapolis, Atlanta, Denver and Chicago all saw weekend performance at a higher level than the rest of the week. Major hotel markets outside of the Top 25 that appeared to see an improvement in performance were Indianapolis, Kansas City, Pittsburgh and Salt Lake City.

Global RevPAR above US$100 for sixth straight week

Global RevPAR, excluding the US, increased 4.7% year-on-year, driven by ADR (+4.4%), while occupancy remained relatively stable (+0.2ppt) at 73.3%, the highest level of the year.

Of the largest countries by supply, Indonesia continued to lead in gains, supported by a mix of occupancy and ADR. Eleven of the twelve markets saw increases in occupancy, led by Jakarta (+11.6ppts to 75.2%) and Kalimantan (+11.1ppts to 79.6%). ADR increases were also seen in 10 markets, with Bali (+18.9%) and Jakarta (+15.4%) posting the largest gains.

The final match of the European Championship delivered the third highest ADR ever for Berlin on Sunday, July 14, with a 198.8% increase to $382, while occupancy rose by 11ppts to 87.3%. This helped to improve the country’s results for the week as a whole, as both occupancy and ADR increased (+3.4ppts and +8.3%, respectively).

In the week leading up to the Olympics, France continued to suffer from displacement, with a 9% drop in RevPAR entirely driven by falling occupancy (-7.3ppts). Looking ahead, occupancy in Paris for the Olympic Opening Ceremony on July 22 was at 90% with demand for the remainder of the Games at 83.1%, up +26.8% from the same period last year.

Looking forward

Based on long-term historical trends, next week’s data (ending July 27) is expected to show a slight softening as the summer travel season winds down. In the first full week of August, one in four K-12 students will return to school, according to STR’s 2024-2025 School Break Report.

One silver lining to the technical glitch is that the improvement for airport hotels and various markets continues in the next data we process.

Group activity is also expected to remain high, as is weekday travel in the Top 25 markets.

The rest of the world will also see slowing occupancy and solid ADR growth. Indonesia’s strong performance is expected to continue, along with the robust performance in Paris as the Olympics begin.

*Analysis by Isaac Collazo, Chris Klauda, Will Anns

About STR

STR provides premium data benchmarking, analytics and marketplace insights for the global hospitality industry. Founded in 1985, STR has a presence in 15 countries with North American headquarters in Hendersonville, Tennessee, international headquarters in London and Asia Pacific headquarters in Singapore. In October 2019, STR was acquired by CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces. For more information, visit str.com and costargroup.com.

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