The hotel industry entered 2024 at somewhat normal performance levels with a handful of countries, including China, still in recovery mode.

New Year’s Eve performance was weaker than a year ago, but most of the softness came from the day shift from Saturday in 2022 to Sunday in 2023.

Performance across the four global regions showed that China’s hotel industry had the most dramatic improvement in revenue per available room, increasing 50% year over year over the past four weeks.

Hotels in the Gulf Cooperation Council — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates — exhibited healthy performance at the end of December. Europe continued to post positive performance. The U.S. had a typical end of year.

Because the U.S. was one of the first countries to recover, year-over-year changes have had less to do with recovery and more with calendar shifts, including the move of the New Year’s Eve holiday from a historically strong Saturday in 2022 to the more muted Sunday in 2023.

U.S. hotel industry RevPAR grew 6.4% in the week ending Jan. 6, following a decline of 10.1% in the prior week. Over the past four weeks, U.S. RevPAR was essentially unchanged compared to the same four weeks last year, with average daily rate increasing 1.4% and nearly offsetting an occupancy decline of 0.9 percentage points.

During the past four weeks and like in most weeks of last year, the industry continued to be driven by the top 25 markets.

Top 25 RevPAR over the period was up 1.1% up year over year, while the metric declined by 1.8% on average across the rest of the country due to falling occupancy.

China RevPAR growth is beginning to moderate but was still strong in the first week of 2024 at 41%. Compared to 2019, occupancy is down 2.8 percentage points, and ADR is 3% higher than in the benchmark year. RevPAR is 1.7% below 2019 results.

It is safe to say that performance in Europe has normalized. After a super summer with high leisure demand and increased travel from the U.S., RevPAR growth in the past four weeks slowed to 7.4%, remaining positive over the Christmas period.

RevPAR in the GCC was on the upswing since mid-December after falling in the beginning of the month. The early December decrease was driven by ADR, due to difficult comparisons to 2022 when Qatar hosted the World Cup. This year, COP28 took place in Dubai in early December with modest ADR.

The most significant market mover during the holiday period is New Year’s Eve, which produces the highest absolute RevPAR of any December day in the U.S. and in most northern hemisphere markets.

The day of week on which the holiday occurs makes a big difference. Friday and Saturday holidays traditionally yield the largest year-over-year gains for hotels. This year, the holiday fell on Sunday.

New Year's Eve has fallen on a Sunday three times over the past two-plus decades (2000, 2006 and 2017). In the past two occurrences, occupancy fell 6.8 percentage points year over year.

It’s still a three-day weekend for most individuals, given that Monday is the official holiday, but there is obviously less lure for a Sunday celebration versus Saturday. In fact, the highest occupancy ever seen for New Year's Eve was in 2016 (68.7%), a Saturday, and the lowest was in 2008 (52.7%), which fell on a Wednesday in the midst of the Great Recession. That of course excludes 2020.

This year, New Year’s Eve occupancy in the U.S. declined 6.1 percentage points year over year. With ADR down 1.6%, RevPAR decreased 11%. The decrease in performance was greater than what was expected. However, there is a silver lining.

Performance over the three-day holiday weekend Friday through Sunday was up as RevPAR increased 6.4% versus the New Year's Eve holiday weekend a year ago. Occupancy rose 2.4 percentage points and ADR was up 1.9%. This better performance was driven by Sunday’s growth.

In Europe, hotels got a boost over both New Year's Eve and the three-day weekend. RevPAR for the three-day weekend was up 16% while New Year's Eve was up 6%.

Performance varied across the major global cities, driven by events versus the actual holiday in many.

• New Orleans hotel RevPAR increased 26% year over year on New Year's Eve and 20% over the three-day weekend. College football — specifically the Sugar Bowl held Jan. 1 between the Texas Longhorns and Washington Huskies — was mostly responsible for the strong performance.
• RevPAR in Los Angeles grew 16% on New Year's Eve and 14% over the holiday weekend. Los Angeles benefited from an easier comparison to last year when the Rose Bowl was held a day later.
• Sydney and Dubai posted double-digit RevPAR gains.
• Paris posted the highest ADR of any global market at $586, but it was down 9% year over year. The softness was likely due to a high-level security alert put on for New Year's Eve on the back of a terror event earlier in December.
• Rio de Janeiro hotels posted the second-highest ADR of any global market at $577, up 12%.
• New York and London took top honors for the three-day weekend with RevPAR gains over 20%. ADR up 21% drove New York’s performance while occupancy increased 6%. London was more balanced with ADR increasing 11% and occupancy up 8%.
• In Singapore, where December’s year-over-year performance was slightly soft, RevPAR rose 4.5% for New Year's Eve and 5.8% for the three-day weekend.

After dramatic swings across the globe over the past three years, hotel performance is settling into typical patterns.

The industry’s three-legged stool of group, leisure and business demand is showing stability.

Group business is expected to remain healthy based on the strong showing at the end of 2023.

Leisure travel shows no sign of slowing. However, the destination choice may shift as the domestic/international traveler mix for many countries resets, which will help some regions and slow others.

The elusive business travel demand segment is expected to continue growing in baby steps. However, most analysts are not predicting full recovery of traditional business travel but rather a shift in business travel patterns with remote workers, blended travel and the end of recession talk driving this segment forward.

Isaac Collazo is vice president of analytics at STR. Chris Klauda is senior director of market insights at STR. William Anns is a 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.

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