For this edition of STR’s U.S. “bubble” chart update, we returned the focus to revenue per available room (RevPAR), a core indicator of the general financial health of hotel markets. For the four weeks ending 10 September, there was an expected seasonal softening from the mid-summer travel peak. In fact, only six of the 165 STR-defined U.S. markets saw month-over-month RevPAR increases for the period, which included the Labor Day holiday. That holiday typically produces major decreases in industry demand—especially weekday business travel—as well as marks an informal end to summer travel.
As anticipated, U.S. hotel demand for the week of 11-17 September 2022 soared back, increasing 13% week on week (WoW) and pushing occupancy to a six-week high of 69.6%. Weekday (Monday-Wednesday) occupancy was slightly better at 69.9%, with the measure reaching 75.5% in the Top 25 Markets—the second highest level of the pandemic-era behind the week ending 18 June 2022. Nominal average daily rate (ADR) made its way to a seven-week high (US$156), up 5.8% WoW and +18% year on year.
STR’s latest global bubble chart update shows strong top-line performance indicators for much of the world during the four weeks ending 20 August 2022. Among the developments since our previous update, countries around the Mediterranean region led in overall performance, while more markets overall eclipsed pre-pandemic levels of occupancy. Among the 48 countries with room supply of more than 50,000 hotel rooms, 11 reported occupancy above 75%, which was four more than the previous 28-day period.
Well past the second anniversary of the pandemic, business travel has yet to recover. There have been green shoots of hope seen in increasing weekday demand across the U.S. and U.K. as well as signs of recovery in traditionally business-focused urban hotels. However, consumer sentiment suggests a full return to pre-COVID levels of business travel may never occur. If there is full recovery in terms of volume, the composition of the segment will probably look different.
While the calendar shows that the summer of 2022 is pushing toward its conclusion, travel season remains in high gear around the U.S. Aligned with that season, the latest four-week “bubble” charts from STR show that leisure-oriented travel remains the predominant force behind the top performing U.S. hotel markets. For the four-week period ending with 16 July, Oahu led the Top 25 Markets in average occupancy (84.2%) with a conspicuous boost during the Fourth of July holiday—the same period when most markets saw expected and significant demand declines.
Robust top-line hotel performance indicators for the four weeks ending 11 June point to a clean transition between a rock-solid recovery during the spring to summer’s traditionally leisure-heavy travel period. With domestic leisure travel expected to remain strong, along with a recent lifting of international travel restrictions, STR expects a record-breaking summer season with numerous U.S. hotel markets to surpass 2019 comparables.
Well past the second anniversary of the pandemic, business travel is showing its first significant signs of recovery. As that recovery gains momentum, a new landscape has formed with the presence of both traditional and new forms of business travel. Amid this new landscape, however, there remains mixed consumer sentiment toward business travel as well as a large gap between current volume and pre-pandemic comparables. STR’s consumer research from May 2022 produced telling insights into this always popular topic.
The last few months have seen a much-welcomed boost in demand for the travel industry as COVID-19 restrictions have continued to ease in many parts of the world. STR’s Market Recovery Monitor shows that around two-thirds of global markets and over 95% of U.S. markets are now in a recovery or peak position achieving revenue per available room (RevPAR) indexed to 2019 at 80 or above. Further, around 70% of U.S. markets and 40% of global markets are now achieving higher RevPAR than in pre-pandemic times.
For the four-week period ending 14 May 2022, more than three-quarters of all U.S. hotel markets outperformed their comparable 2019 revenue per available room (RevPAR) on a nominal basis. Of 165 STR-defined U.S. markets, only 38 fell short of their 2019 RevPAR, which was a solid improvement from 52 underperformers in April’s “bubble” blog update. Industry RevPAR looks to be on steady footing; however, a look at RevPAR contribution shows a greater influence from average daily rate (ADR) as opposed to occupancy in many areas.
All scales reported ADR growth over March 2019, ranging from +2.8% (upscale) to +26.8% (luxury) despite occupancy declines across the board. Upscale (+1.6%), upper midscale (+4.1%) and midscale (+1.0) properties posted demand growth, but each are competing with an influx of supply (+10.5%, +8.4% and +3.6%, respectively) which offsets any potential occupancy gains. Upper upscale showed the worst RevPAR decline (-8.4%), driven down by a 12.1% demand decline coupled with 4.6% growth in supply.
More than two-thirds of STR-defined U.S. hotel markets (113 of 165) outperformed their 2019 comparables over the four weeks ending 9 April 2022, which is reflective of the industry’s rebound toward normalcy as well as some influence from inflation. Only seven markets in total over the 28-day period reported revenue-per-available-room (RevPAR) indices below 80 (20% below 2019 levels). Late March into early April 2022 also marked a key turnaround in the number of major markets making appreciable performance gains toward historical performance levels.
Global tourism receipts were well below the pre-pandemic level in 2021 as travel restrictions and uncertainty persisted, and changing consumer behavior dented economic recovery. But now, in the spring of 2022, some two years since COVID-19 forced governments to impose lockdowns and severe travel restrictions, there are plenty of signs of optimism for the future of tourism. This is true even with potential macroeconomic and geopolitical headwinds.
Hotel performance has remained stable in most of Europe amid the war in Ukraine, and countries bordering the conflict area have seen a refugee-driven lift in occupancy. Using standard methodology, which excludes temporary closures from the pandemic, Europe’s hotel occupancy hasn’t dipped below 53% on a running 7-day basis since late February. The latest data for 20 March showed occupancy above 58%. When indexed to 2019, levels over the last few weeks have not fallen below 77% of the pre-pandemic comparables and came in above 80% on 20 March.
The U.S. hotel industry posted its highest weekly occupancy since the end of summer 2021 with a level of 66.9% during the week of 13-19 March 2022. Boosted by Spring Break and NCAA March Madness, one-fifth of the 166 STR-defined U.S. markets reported their highest occupancy of the past 32 weeks with 12 markets achieving pandemic-era highs. For a second consecutive week, average daily rate (ADR) increased by more than 4%, pushing the weekly level 14% higher than the 2019 comparable.
Leisure travel continues to be particularly strong in the U.S. as spring kicks into gear, and the biggest hotel performance wins recently have come in those U.S. markets that are traditional Spring Break destinations. At the same time, major urban centers are seeing some return of transient business demand along with increases in group bookings. Since last month’s update, travelers have continued to seek relief and respite in warmer or winter-fun locales, as shown by hotel performance data for the four weeks ending 12 March 2022.
U.S. hotel weekly occupancy slipped a bit in the most recent week of reporting (27 February-5 March 2022), falling to 61.2% from 62.2% the week prior. While all attention is focused on rising gas prices and the potential impact on hotel demand, this week’s decrease was due to a weaker Sunday as the previous Sunday benefited from the Presidents’ Day holiday. Excluding Sunday, occupancy for the remaining six days reached 63.2%, the highest six-day result in the country since mid-November.
Los Angeles hoteliers enjoyed a strong lift but underperformed due to the Omicron impact. Since 2011, STR has analyzed the top-line hotel performance impact for the Super Bowl host city, both in terms of absolute performance and year-over-year change. As usual, STR also made a prediction about Los Angeles hotel performance weeks before the event, forecasting revenue per available room (RevPAR) of US$396 for the weekend of the big game (Friday-Sunday).
Driven by the Presidents’ Day holiday weekend, U.S. leisure travel made a big comeback and pushed occupancy 4.6 percentage points to 59.1% during the week of 13-19 February 2022. That was the highest level of the past 13 weeks and the second consecutive week in which occupancy expanded by more than four percentage points from the previous 7-day period. The demand expansion was somewhat widespread as 40% of the 166 STR-defined U.S. markets reported weekly occupancy of 60% or more.
STR’s latest 28-day visuals show markets collectively getting closer to their seasonal performance expectations. The leaders and laggards are highlighted in the “bubble” charts below with averages covering the four weeks ending 12 February. Among the Top 25 Markets, four of five leaders have recently outpaced their comparable revenue per available room (RevPAR) from 2019. Miami had the top four-week RevPAR (US$203) and a RevPAR index score of 104 (4% above the 2019 comp) after hitting 161 last month.
U.S. weekly hotel performance continued to rev up with the largest week-over-week increase in occupancy this year. A level of 54.6% for 6-12 February 2022 was 4.2 percentage points better than the week prior, and in absolute terms, occupancy was highest since the second week of December. All day parts saw growth with the largest occupancy gain over the weekend (Friday and Saturday), up 6.6 percentage points to 64.1%. Of the 166 STR-defined markets, 91% reported week-over-week gains in weekend occupancy.