Week to week, U.S. hotel industry performance hasn’t moved much in January, which typically coincides with a seasonal slowdown in hotel demand.
However, one sign that the industry’s recovery remains on track is that the percentage of hotels with very low weekly occupancy — below 30% — has not deteriorated to levels recorded a year ago and was somewhat flat over the past two weeks.
Three weeks ago, nearly a quarter of all U.S. hotels were reporting occupancy under 30%. For the week ending Jan. 22, that percentage was 18% as compared to 32% a year ago. The same trend is being reported in urban locations, where the latest weekly data shows 24% of hotels had occupancy under 30%, compared to 33% in that low-occupancy range three weeks ago. A year ago, nearly half of all urban hotels were in the low occupancy category.
Though leisure travel demand is typically not heavy in January, that segment is picking up as February approaches. That trend is evident in the improving occupancy at resort hotels.
Hotel occupancy in Hawaii averaged 66% — the highest of any state, followed by Vermont at 66% and Florida at 64%. Florida hotel occupancy was up nearly two percentage points from the previous week, but remained about 15% below the level achieved in the comparable week of 2019.
The Florida Keys continued to have the highest occupancy of any market at 87%, joining eight other Florida markets in the top 10 for highest weekly occupancy. Overall, six of the 13 Florida markets had higher room demand than in the comparable week of 2019. Across the U.S., 47 markets reported hotel room demand that topped 2019, down from 58 a week ago.
Airport hotels have done best over the past three weeks with an average occupancy of 55.3%.
The top performing airport hotels were in Miami, where occupancy has averaged 81% over the past three weeks, followed by Hollywood, Florida, where hotels have achieved 76% occupancy.
Hotel occupancy was also up in locations that are most likely to be impacted by winter weather, with 72% occupancy in Denver and around La Guardia Airport in Queens, New York.
Not surprising given the dearth of business and group travel, the worst performing hotels were in urban locations, where occupancy has averaged 40% over the past three weeks. Occupancy has been weaker for urban hotels with more than 300 rooms at 34%. Small hotels in urban locations, with fewer than 75 rooms, continued to report the best occupancy at 51%, while hotels with between 75 and 299 rooms had 43% occupancy.
Across the U.S. hotel industry, occupancy fell a 10th of a percentage point week over week to 48.7%. Room demand declined by 13,000 nights, but remained above 18 million for the week and was 87.2% of what it was in the comparable week of 2019.
Weekly average daily rate increased for a second week, but by only 0.2% and was 98.6% of what it was in 2019. Revenue per available room also moved slightly upwards (0.1%) with its index to 2019 (82.9%), the highest of the past three weeks.
Weekday occupancy was 47%, marking a second week of improvement, driven by stronger Sunday occupancy due to the Martin Luther King Jr. Day holiday. There was also a slight improvement in Tuesday and Wednesday occupancy. Weekend occupancy fell from 58% during the MLK holiday weekend to 53%, and its index to 2019 (88%) was the lowest of the past four weeks.
While total U.S. hotel ADR percent change was minimal, there were some dramatic differences in rate composition. Weekday ADR increased by 3.5% from the previous week, with more than half of the growth coming from the Sunday of the MLK holiday weekend. Solid growth was also reported Tuesday and Wednesday, when ADR was up nearly 3%. Weekend ADR fell by 5% after its 8% gain during the MLK weekend. Despite the drop, weekend ADR was 6% higher than in the comparable week of 2019 and has been above 2019 levels for 35 consecutive weeks. On an inflation-adjusted basis, weekend ADR indexed at 95%, its third week below 2019 levels.
For a second week, 73% of the 166 STR-defined markets were categorized as being in “recovery,” with RevPAR between 80% and 100% of 2019 levels; or “peak,” with RevPAR exceeding 2019 levels. On an inflation adjusted basis, 64% of markets were in either one of those two categories.
Hotels in the Florida Keys had the highest weekly index, with RevPAR 62% higher than in 2019. San Francisco had the lowest weekly index, with RevPAR only 33% of what it was in 2019.
San Francisco and San Jose were the only two markets in the “depression” category, with RevPAR below 50% of 2019 levels.
On a 28-day moving total basis, 55% of markets were at “peak” RevPAR, the least of the past 16 weeks, and 33% were in “recovery.” Considering inflation, 43% of markets were at “peak” RevPAR over the past 28 days with another 37% in “recovery.”
Isaac Collazo is VP Analytics at STR.
This article represents an interpretation of data collected by CoStar’s hospitality analytics firm, STR. Please feel free to contact an editor with any questions or concerns. For more analysis of STR data, visit the data insights blog on STR.com.
