US Hotel Industry Sets Eighth Weekly Demand Record This Year
The U.S. hotel industry set a weekly demand record for the eighth time this year, selling 25 million room nights in the week ending Nov. 12.
The previous record for room nights sold in the 46th week of the year was set in 2018, according to data from CoStar hospitality analytics firm STR, which has collected weekly data for 23 years. U.S. hotels sold 296,000 more room nights in week 46 this year than in 2018 — or 42,000 more room nights every day of the week. Occupancy, however, was 1.9 percentage points lower than in 2018 due to supply, which is 4.1% higher than in 2018.
Only 2019 has been more record-breaking in terms of weekly U.S. hotel demand. By this time in 2019, the U.S. hotel industry as a whole had set weekly demand records in 27 of the 46 weeks. Those records, however, were more heavily weighted by the 25 largest hotel markets.
This year, the top 25 markets have set weekly demand records five times. All other markets outside of the top 25 have broken weekly demand records in 20 of the past 46 weeks — the most in any single year since tracking began. Total weekly room demand surpassed 2019 by 756,000 room nights, while occupancy was up 0.6 percentage points.
Nearly all instances of record-setting weekly demand this year have occurred since the start of summer.
Total demand for the week ending Nov. 12 was up 3.4% from the previous week, which lifted occupancy two-tenths of a percentage point to 64.6%.
Demand overall was high despite the impact of Hurricane Nicole, which resulted in demand losses in hotel markets up and down Florida’s and Georgia’s coastline. In Daytona Beach, demand fell 38.5% week over week and occupancy only reached 39%. Demand was also down by 15% in the submarkets of Panama City, Florida, and Brunswick/Kingsland, Georgia. Statewide, demand and occupancy still increased week over week in both Florida and Georgia.
Also for only the eighth time this year, group demand among luxury and upper-upscale hotels surpassed 2 million room nights. In 2019, group demand exceeded 2 million room nights in 19 weeks. The group deficit to 2019 is most evident in the spring and summer months. This fall season, there have been as many weeks with group hotel demand above 2 million as there were in 2019.
With increased group demand, it wasn’t surprising that luxury and upper-upscale hotels had the largest week-over-week gain in occupancy, with weekly occupancy above 70% and midweek occupancy above 72%. Upscale hotels also did well and had similar occupancy levels in both time periods.
Midweek occupancy, Tuesday through Thursday, dipped overall from 65% to 64.8%, due to softness outside of the top 25 markets. Top 25 midweek occupancy rose half a percentage point week over week to 71.8%, still down 5.3 percentage points from the same week in 2019, though that gap has narrowed slightly since the weeks before Halloween.
Weekend occupancy remained above 73% across the U.S., up 0.7 percentage points week over week. After three straight weekly declines, nominal average daily rate rose 0.3% week over week to $148, which was 13.7% higher than a year ago and 17% greater than in 2019. Inflation-adjusted, or real, ADR was 1.4% better than the 2019 figure. Nominal revenue per available room increased 3.9% week over week to $96, up 19% year over year and 2.3% from 2019.
ADR growth for the week was lower than historical trends suggested it would be.
The week-over-week growth was weighted on Sunday and Monday, when ADR was up by more than 6.4% due to easy comparisons to Halloween in the prior week. ADR from Tuesday to Thursday was down 2.1% week over week, but weekend rates averaged 0.6% higher.
Compared to 2019, real ADR was up 1.4% for the full week, and 14% higher on the weekend. Apart from the weekend, real ADR was down 4% from 2019 levels. Compared to 2021, however, ADR was up 10.3% on the weekend and 16.3% on the other days.
Over the past 28 days, most U.S. markets have reported real RevPAR above 2019 levels, with the total industry right at the 2019 level. The Florida markets (Sarasota and Fort Myers) hit hardest by Hurricane Ian continued to post the highest real RevPAR increases over 2019, at 50% or more.
Among the top 25 markets, Tampa had real RevPAR 23% greater than its 2019 level followed by San Diego and Phoenix, where real RevPAR was at least 11% higher than in the same four weeks of 2019. Oakland, San Francisco, San Jose and Portland continued to be in the “recession” category, with real RevPAR less than 80% of what it was in 2019.
Central business district hotel performance was solid with weekly occupancy reaching 71.8% and midweek rising to 73.7%. While good, midweek occupancy was 10.1 percentage points below 2019, due in part to 7.3% supply growth. Even if supply had been static though, weekly occupancy was 4.8 percentage points below 2019 occupancy. The Austin central business district had the highest midweek occupancy at 89.7% with the Boston central business district closely behind at 89.3%. Both markets were also behind their 2019 performance, but both sold more rooms this week than in 2019.
For the second week, the U.S. market with the highest weekly occupancy was Fort Myers, Florida, at 84%. Following closely behind were Phoenix at 83.7% and New York City at 83%. New York City occupancy has surpassed 80% 20 times this year, and in 10 of the past 11 weeks. In all of 2020 and 2021, NYC occupancy surpassed 80% just twice, compared to 42 times in 2019.
Phoenix had the highest midweek occupancy at 85.9%, followed by New York City at 81.9%. Midweek occupancy in Phoenix was above the level set in the same week of 2019, while New York City continued to trail that level. The strong performance in Phoenix came from increased group demand, which accounted for 55% of the week-over-week gain in total room demand.
Boston and Anaheim (Orange County) also reported strong growth in midweek occupancy with both also benefiting from increased group demand, but to a lesser extent than Phoenix. Denver had the largest week-over-week decrease in occupancy, from 75.6% to 67.4%, largely due to lower group demand, which accounted for 70% of the total loss in room nights.
Isaac Collazo is VP Analytics at STR.