U.S. hotel revenue per available room dropped 0.7% in the week of Aug. 31 to Sept. 6. This was RevPAR’s 19th weekly drop this year and 12th in the past 16 weeks.
Like what we have seen with most of the declines, falling occupancy drove the RevPAR retreat. However, average daily rate dipped 0.2% and also contributed to this week’s RevPAR decrease.
In aggregate, the top 25 U.S. hotel markets saw RevPAR decrease 1.5% whereas the remaining markets were nearly flat (-0.1%). This is also nothing new as the top 25 have seen weaker RevPAR results compared to the remaining markets for 11 consecutive weeks.
Houston and Las Vegas continued to be large contributors to the top 25’s weak stature. In the most recent week, Houston and Las Vegas accounted for 1.1 percentage points of the decrease in the top 25 U.S. hotel markets. Houston’s declining performance is a result of difficult comps to last year’s early summer storms and flooding. Las Vegas’ decline is due to the decrease in international travelers and the lackluster economic environment.
In total, 16 of the top 25 U.S. hotel markets saw RevPAR reverse, which is similar to the past 10 weeks. Houston hotels saw the largest RevPAR decrease at 18.7%, mostly on falling occupancy. San Francisco saw the largest increase – up 24.7% – on nearly equal gains in occupancy and ADR.
Overall, 84 markets saw RevPAR decrease, as compared to 88 in the prior week and 87 before that. Despite the number of U.S. markets with negative RevPAR comps improving slightly, the overall trend for the count of markets with negative weekly occupancy and ADR comps continues to rise slowly.
Historical context
For 10 weeks in a row, weekly RevPAR percentage changes have been 0.5% growth or less.
The last time that the U.S. saw a 10-week stretch of similarly tepid weekly RevPAR performance (+0.5% or less) was early in 2021. The previous two instances were in late-2009 and mid-2002.
Labor Day drove weekday RevPAR growth
With the week including Labor Day, it was surprising that weekday from Monday to Wednesday was up (+0.1%) on an ADR gain — driven by San Francisco and San Diego. RevPAR was also up on Labor Day by 1.1%.
Daily RevPAR has only increased 1% or more 21 times during the past 12 weeks – 84 days – including three times the past two weeks. Shoulder days Sunday and Thursday were down the most (-1.6%) because of Sunday. Weekend RevPAR on Friday and Saturday was also down by 0.8%.
However, with the return of college football, several hotel markets saw large weekend RevPAR growth, including Oklahoma City (+72.5%), Wisconsin North (+47.3%) and Missouri North (+43.2%). But given game calendars shift from year to year, it was not surprising that there were nearly the same number of markets that saw double-digit gains as there were that saw double-digit decreases.
No change in hotel class bifurcation
Among hotel classes, luxury capitalized the most on weekdays with RevPAR up 4%. Economy class hotels saw nearly the same level of decrease. Upper upscale also saw a weekday RevPAR gain. Over the weekend, only luxury class hotels reported RevPAR growth (+2.9%) as all other classes were down with economy hotels seeing the largest decrease (-5.6%) on nearly equal declines in occupancy and ADR.
As in previous weeks, economy class hotels continued to be affected by their exposure in top 25 U.S. hotel markets. In the most recent week, RevPAR in economy class hotels in the top 25 markets fell 9.3% versus 3.7% elsewhere. Over the past eight weeks, RevPAR in economy class hotels in top 25 markets has retreated by 10.8% on equal decreases in occupancy and ADR. Elsewhere and like this week, the decrease has been just under 4%.
Two clean weeks for growth
It’s likely the next two weeks ending Sept. 13 and Sept. 20 will be positive for U.S. hotels as they are the only two “clean calendar” weeks this month. The week ending Sept. 27 will be affected by Rosh Hashana, which begins at sundown on Monday, Sept. 22, and ends at sundown Wednesday, Sept. 24, bringing conference and business travel to a crawl.
Nine days later, travel will be impacted, to a lesser extent, by Yom Kippur, which begins on Oct. 1. Also keep in mind that U.S. hotel results, especially in the southeast, will see difficult comps starting Sept. 25 due to Hurricane Helene’s landfall a year earlier. Hurricane Milton comps will also be a factor in October.
Global RevPAR slowed but remained well ahead of the US
Excluding hotels in the U.S., global same-store RevPAR advanced 3.7% during the week of Aug. 31 to Sept. 6, a slower rate than a week ago as occupancy decreased but ADR advanced strongly. Italy, France, Japan, and India all saw double-digit RevPAR growth while China and Indonesia posted double-digit decreases.
Canadian same-store RevPAR advanced 3.6% versus the 8.7% gain a week ago. After seven weeks with hotel occupancy at or above 80%, this week’s occupancy dropped to 67.9%. All Canadian hotel markets saw slowing occupancy growth, however, most markets recorded an occupancy increase, including Toronto, pointing to seasonality in the measure and likely nothing more.
Like in Canada, Mexico’s same-store hotel RevPAR also slowed (+3.7%) with occupancy flat but nearly 10 points lower than a week ago. This too is likely based on seasonality.
Isaac Collazo is senior director of analytics at STR. Brannan Doyle is a senior research analyst 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.Click here to read more hotel news on CoStar Hotels.