In the final week of May, U.S. hotels notably experienced a lackluster weekend. But at the start of June, that weak performance has shifted to the weekdays.
Performance across the U.S. hotel industry was soft in the week of June 1-7 with steep performance declines on Sunday followed by gradual, but still lagging, improvement throughout the week eventually ending with a flat weekend.
Mirroring the slowdown in hotel performance, TSA screenings produced the largest weekly decline of the year. It was a difficult comp to last year with conference shifts across top convention markets and a later end to many school calendars. As shown in STR’s School Break Report, there has been a lag in the number of students on break compared to last year. The gap will close in the next two weeks of hotel performance data.
Regardless, another negative week adds to the rumblings around a slowdown in travel. However, the positive booking pace in our forward-looking data provides reassurance that travel is not coming to a halt just yet.
The weekend recovered but not enough to rescue the week
Revenue per available room for the week retreated 3.2%, a function of occupancy falling 2.2 percentage points and flat average daily rate. Sunday through Thursday averaged a RevPAR decline of 4.6%, while the weekend held almost steady with RevPAR down just 0.3%.
The top four hotel chain scales in the top 25 U.S. hotel markets saw the strongest weekend performance with luxury hotels advancing the most followed at almost equal levels by the next three chain scales. Luxury hotels continued to post healthy weekend performance in cities outside the top 25 as well.
Hotels in the other chain scales posted negative RevPAR performance, ranging from down 1% in upper upscale to a 6% drop in economy; this was in both city markets outside the top 25 as well as markets not dominated by one city.
Weekdays in the top 25 markets saw the largest declines with conference shifts and the later start to summer vacation having an impact. RevPAR declines ranged from down 3% in luxury to down 9.2% in economy. Weekday performance in all other markets was also down but not as steep as in the top 25 U.S. hotel markets.
Weekend, weekday seesaw across top 25 markets
Market performance fluctuates every week with shifting weekday and weekend events, but the most recent week was particularly jumpy with eight of the top 25 U.S. hotel markets exhibiting extreme weekday/weekend fluctuations.
- Three markets with positive weekday RevPAR comps and a negative weekend were San Francisco, Atlanta, and New Orleans. Weekend losses in Atlanta and New Orleans reached double-digits and were primarily in each city’s central business district.
- On the flip side, six markets with a healthy weekend after weak weekdays were Chicago, Tampa, Las Vegas, Boston, Anaheim (Orange County) and Denver. Las Vegas’ weekday/weekend shift was the most dramatic with a 33.2% weekend RevPAR gain and a 23.9% weekday RevPAR loss.
- St. Louis was one notable exception with strong weekday and weekend RevPAR growth. St. Louis has seen double-digit RevPAR growth for the past three weeks due to several large conventions. In the most recent week, the city hosted two baseball series along with the Kendrick Lamar Grand National Tour. The latter was attended by more than 50,000.
What US hoteliers can expect
After two weeks of declining U.S. hotel RevPAR, next week could serve as a turning point in understanding the direction of summer travel. June hotel occupancy on the books has been up versus last year, and each week we see improvement in the year-over-year comp. A shorter booking window is a main contributor to that trend as economic uncertainty appears to be resulting in later travel decisions. Hence, the decreases we see in July and August are not yet alarming.
Economic indicators such as unemployment, business confidence and consumer confidence all reflect a stable outlook. Slowing TSA screenings are a concern; however this may be a function of travelers shifting to car travel and slowing outbound international travel due to the falling U.S. dollar.
Global RevPAR still up
Global hotel RevPAR growth slowed after two strong weeks, however the measure remained positive, up 3.2%, largely on ADR. Excluding China, RevPAR was up 6.1%. Demand tells a different story, declining 1.9%. Even excluding China, global hotel demand declined 1%.
Across the key countries, Japan continues to be lifted by EXPO 2025, which runs through October. Hotel demand rose 4.7%, while RevPAR advanced by nearly 40%.
India saw the largest hotel demand increase (+6.7%) with RevPAR up 13.8%.
Spain was the only other country with positive demand and RevPAR comps.
Countries seeing the greatest hotel performance declines were led by Indonesia, which is recovering from the devastating earthquake in March. France’s ADR fell across the country while demand held. China also saw a greater ADR decline (-7.4%) versus its demand decrease (-3.5%). The majority of its markets followed this pattern, with four of the five largest markets – Shanghai, Beijing, Jiangsu and Shandong – seeing demand decline at a faster rate than ADR.
Globally we anticipate a slower summer due to fewer blockbuster events such as the Olympics, Taylor Swift’s ERAs Tour, and EURO 2024. The falling U.S. dollar may slow the flood of Americans traveling overseas and U.S. immigration policies could deter some foreign-born U.S. citizens – representing around 16% of the U.S. population – from traveling abroad.
Isaac Collazo is senior director of analytics at STR. Chris Klauda is director of market insights 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.