• Hotel Occupancy Has Another Best Week, Lumber Prices Plummet, Jobs Recovery Good But Slower

    Hotel Occupancy Has Another Best Week, Lumber Prices Plummet, Jobs Recovery Good But Slower

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    The average occupancy of U.S. hotels increased for another week. (Getty Images)
    The average occupancy of U.S. hotels increased for another week. (Getty Images)

    Hotel Occupancy Has Another Best Week

    U.S. hotel occupancy rose to its best week since October 2019, a strong indicator that the industry is fast approaching normalcy.

    Average occupancy hit nearly 70% for the week ended June 26, nearly two percentage points higher than the previous week, according to the latest data from hotel industry research company STR, which is owned by CoStar Group.

    Occupancy has steadily improved each week since Memorial Day weekend.

    “June really kicked things off a lot,” said Kelsey Fenerty, a senior analyst with STR. “Leisure travel is back and then some.”

    The Transportation Security Administration is reporting consistent days of 2 million people passing through security checkpoints at U.S. airports, narrowing the gap with 2019.

    Hotel companies are banking on leisure travelers buoying the industry until group meetings and conventions return. Weekend occupancy hit 82%, better than the same weekend in 2019 for the second time in three weeks.

    The summer may turn out even better than expected. In a recent Harris Poll, 62% of Generation Z, born between 1997 and 2012, and 49% of millennials, those born between 1981 and 1996, said they are trying to make up for the lost summer last year when the pandemic was still rampant and they now plan to spend more money to have fun again. About 39% of baby boomers, those born between 1946 and 1964, had that attitude.

    For the second consecutive week, Oahu Island, Hawaii, had the highest occupancy among the 25 largest U.S. hotel markets tracked by STR at 81.35%. Travelers now are free to hit the beaches there, pushing the island from one of the worst occupancies during the pandemic to the best.

    Beach destinations in Norfolk-Virginia Beach in Virginia, San Diego, and Tampa, Florida, followed. Orlando, Florida, continues to improve with the opening of attractions there and rose into the top five with occupancy at 76.84%, shy of its 80.5% occupancy in the comparable week in 2019.

    Group business, though, is making its comeback as cities open their doors for in-person meetings. Fenerty said that demand is “growing at an accelerated pace.”

    Demand last week was at 44% of 2019 levels, up from 30% six weeks ago, Fenerty said.

    Lumber Prices Plummet

    Lumber prices tumbled in June to what could be its worst monthly drop in more than four decades.

    After hitting a record high price on May 7 of $1,670 per thousand board feet, prices have dropped more than 56% and more than 40% in just June.

    Lumber producers were stung by an unexpected surge in demand during the pandemic while they were slowing operations to adapt to coronavirus protocols and concluding that demand would plummet because of the pandemic. Instead, homeowners started doing delayed renovations around the house and homebuilders saw demand rise for new construction as people sought to shift to the suburbs.

    The National Association of Home Builders said the dramatic rise in lumber prices added about $36,000 to new construction homes.

    High prices may have cooled the quest for home renovations but homeowners also may have shifted to taking vacations they couldn’t take because of pandemic restrictions.

    Though lower, lumber prices still are close to double what they were a year ago.

    "I would not be surprised at all if we see the price continue to trail lower than $600 or below toward the year-end," Mace McCain, president and managing director at Frost Investment Advisors, told Business Insider. "We will continue to see supply come on board but we will not see demand continue to grow."

    Jobs Recovery Good But Slower

    Private companies added fewer jobs in June than in May, according to the latest report from payroll company ADP. But the number still beat Wall Street expectations.

    ADP reported that private payrolls grew by 692,000, much more than the 550,000 that Dow Jones had estimated.

    That was lower than the 886,000 jobs in May, a number ADP revised down from 978,000.

    Still, the numbers show how well leisure and hospitality has been staffing up, even though there have been concerns over hiring difficulties.

    Overall, hiring was roughly evenly split between small, mid-sized and large companies.

    On Friday, the government reports non-farm payrolls. That number has generally tracked lower than ADP.

    Overall, hiring was roughly evenly split between small, mid-sized and large companies.

    On Friday, the government reports non-farm payrolls. That number has generally tracked lower than ADP.