STR Snapshot: 28 January–3 February, 2024

The Top 25 Markets had a more pronounced seasonal pause in occupancy, which was down 3.1ppts from the prior week. Compared to last year, occupancy was up (+0.8ppts) with ADR increasing 2.9 per cent (just below the annual rate of inflation), lifting RevPAR 4.3 per cent.

Excluding Las Vegas, which had a slow week ahead of Super Bowl festivities, the Top 25 saw RevPAR advance 6.5 per cent YoY driven by growth in ADR (+3.8 per cent) and occupancy (+1.6ppts). Weekdays (Monday-Wednesday) were especially strong in the Top 25 Markets (excluding Las Vegas) with RevPAR up 11.3 per cent on strong ADR (+5.3 per cent) and occupancy (+3.5ppts).

The rest of the country saw RevPAR decline 0.5 per cent on falling occupancy (-0.6ppts) and weak ADR growth (+0.6 per cent). RevPAR outside of the Top 25 Markets has fallen in every week of the year so far and in 28 of the past 30 weeks. The decreases continued to be focused on Economy class hotels with lesser contribution from Midscale class hotels.

Seven of the Top 25 Markets saw double-digit RevPAR increases, including Seattle (+27.5 per cent), Boston (+17.9 per cent) and Washington D.C. (+17.0 per cent), lifted by a combination of occupancy and ADR increases. Oahu, New York City, Orlando, and Miami rounded out the list with each market seeing RevPAR gains driven by gains in both occupancy and ADR, except for Oahu, where RevPAR was driven exclusively by ADR. All seven markets also saw YoY growth in group demand.

As stated earlier, Las Vegas had a slow week ahead of the Super Bowl with RevPAR falling 9.3 per cent YoY following significant growth in the prior week (+88.6 per cent). Outside of the Top 25 Markets, Baltimore, Jackson, MS, San Jose/Santa Cruz, and Knoxville saw RevPAR increase by more than 20 per cent+ YoY.

Group business gains

Group demand in Luxury and Upper Upscale hotels grew for the fourth consecutive week, increasing 10 per cent compared to the same week last year and up 7.2 per cent over the past four weeks. Group ADR has also increased, up 2.3 per cent YoY and 6.4 per cent over the past four weeks.

Seventeen of the Top 25 Markets saw year-over-year group occupancy gains, with several posting group occupancy of more than six percentage points above last year (Atlanta, Denver, Houston, Miami, Orlando, Phoenix, and Seattle).

Across the hotel classes, Upper Upscale and Upscale saw the strongest YoY RevPAR gains, up 5.4 per cent and 4.8 per cent, respectively, driven by occupancy. Luxury class hotels saw flat RevPAR (+0.3 per cent) as occupancy grew (+0.7ppts) but ADR retreated (-1.2 per cent). A week ago, these hotels saw RevPAR increase 12.1 per cent, lifted by both ADR and occupancy. Luxury hotels are expected to see strong growth in the week ending 10 February, driven by Las Vegas with the Super Bowl. Upper Midscale hotels remained within one percent on all KPIs compared to last year, matching performance seen last week. Midscale and Economy hotels continued with RevPAR declines seen over the past months.

Global hotel performance

For the second straight week, the U.K. saw the highest occupancy (68.4 per cent) across the top 10 countries outside of the U.S., posting an increase of 1.8ppts YoY as well as seeing an exact occupancy match to the day-to-day comparable year of 2018. If historical patterns continue, the U.K should see improving occupancy over the next three weeks. ADR also continued to grow, up 3.2 per cent YoY to US$122 and resulting in a RevPAR gain of 6.1 per cent.

Following on the heels of China‘s strong performance in the last few weeks, Indonesia saw RevPAR increase 23 per cent YoY with occupancy at 60.9 per cent, 4.3ppts ahead of 2023, and ADR advancing 14.4 per cent to US$65. While there is not a large Chinese population in Indonesia, Chinese New Year celebrations are expected across the country, driving additional growth in the coming weeks.

Italy continues to see strong performance gains with some of its growth coming from inbound travel from America, which was up 35 per cent versus 2022 and up 15 per cent compared to 2019 according to the U.S. International Trade Administration I-92/APIS International Air Passenger Monitor. This week, occupancy increased 2.4ppts to 58.0 per cent with ADR up 11.6 per cent YoY to US$158. Over the next 90 days, the key cities of Rome and Milan show some of the highest average gains in occupancy on the books versus the same time last year (+4.7 per cent and +7.0 per cent, respectively).

Spain saw the largest occupancy growth of the top 10 countries as the measure grew 6.2ppts YoY to 65.8 per cent due to events in Barcelona and Madrid. ADR increased 11.1 per cent, and RevPAR was up 22.6 per cent YoY.

Overall, eight out the top 10 countries posted YoY occupancy gains, while nine saw YoY RevPAR gains with six of the 10 reporting double-digit RevPAR growth led by Japan (+29.5 per cent).

Looking ahead

RevPAR in 2024 is off to a weak start in the U.S., increasing just 1.7 per cent over the past four weeks. The good news is that ADR has been solid over this period (+3.5 per cent) and above the rate of inflation. Falling occupancy, however, has held the industry back. Demand in lower-tier hotels (Upper Midscale, Midscale and Economy) has fallen in most weeks across all three of those classes with the largest decreases in Economy (-5.5 per cent). Demand is expected to steadily improve over the next several weeks as business and group travel return, reaching a seasonal peak in mid-March. However, the lower-tier, particularly Midscale and Economy, will likely not see an improvement soon. We still expect year-over-year occupancy changes to be less volatile than last year, with ADR growing, mainly from upper-tier hotels in the Top 25 Markets. Looking at the upcoming week’s data, the Super Bowl, which is predicted to have the highest ADR ever, will propel Las Vegas and impact the overall U.S., especially the Luxury segment.

Over the next two months, global performance will be driven by holidays, in particular Chinese New Year, sporting events, concerts (Taylor Swift’s international tour in Tokyo 7-10 February followed by stops in Australia and Singapore), conferences/conventions, and the change of seasons.

By the beginning of the second quarter, we expect double-digit global RevPAR growth to wane. Already this year, one of the five weeks had RevPAR growth under 10 per cent, which will become more common as the year progresses.