Amid constant change around the world, U.S. hotel performance remains steady, with growth increasingly driven by pricing.
U.S. hotel revenue per available room (RevPAR) increased 4.6% the week of May 17-23, marking seven consecutive weeks of RevPAR growth. Average daily rate (ADR) continued to drive performance, increasing 3.8% last week. Over the twelve weeks since the start of the war in Iran, ADR has increased each week and has outpaced room demand growth in each of the last four weeks, highlighting the U.S. hotel industry’s current trend of ADR-driven growth.
Over the past four weeks, room demand has risen 1.3%, continuing a consistent weekly increase, but pricing gains have been more pronounced, with ADR up 3% year over year. This imbalance between rate and demand growth is most evident at the class level, where performance has increasingly diverged.
Luxury hotels led all classes with an 8.3% increase in RevPAR, driven by a 6.9% increase in ADR. Combined, luxury and upper-upscale hotels posted a 4.5% increase in ADR, resulting in a 5.6% lift in RevPAR, even as group demand declined slightly over the period. This suggests that strong transient demand at the high end has remained resilient enough to absorb higher pricing. In contrast, midscale and economy hotels continued to see softer overall demand, reinforcing the widening gap in performance across chain scales.
Upscale and upper-midscale hotels experienced more balanced growth, with room demand increasing 2.4% alongside a 1.9% gain in ADR. These segments accounted for 83% of total U.S. hotel demand growth over the past four weeks, highlighting their role as the primary contributors to volume gains. Strength in transient demand within these classes has helped offset weaker group demand at the higher end, while also contrasting with softer trends in lower-priced segments.
Early data from Memorial Day weekend reinforces these trends, particularly around pricing at the upper end of the market. Friday and Saturday room sales declined 1.2%, and occupancy fell 1.3 percentage points compared to the same days last year, yet RevPAR still increased 1.9% due to a 3.6% rise in ADR. These results further underscore U.S. hoteliers’ ability to drive growth through rate, even in a softer demand environment.
The holiday weekend also amplified the K-shaped trends in class performance. Luxury hotels posted the largest RevPAR gains, increasing 8.3%, supported by an 8.6% rise in ADR. Despite an average weekend rate of $462, luxury was the only class to record an increase in rooms sold, indicating continued strength in high-end transient demand even at elevated price points.
Market-level performance over the weekend reflected a combination of sustained recovery trends and event-driven demand. San Francisco and Las Vegas led major markets, each recording RevPAR growth of 28%. In San Francisco, room demand increased 14.2% compared to the start of Memorial Day weekend last year, consistent with the market’s steady recovery over the past six months. Las Vegas’ performance was more event-driven, supported by a series of concerts throughout the weekend, including the first of four BTS shows at Allegiant Stadium. The event contributed to Saturday occupancy reaching 95.9%, highlighting the continued impact of large-scale entertainment on market-level demand.
The top growth markets over the weekend included San Francisco; Las Vegas; Nashville, Tennessee; Orange County, California; and Miami; each posting double-digit RevPAR growth among luxury and upper-upscale hotels. At the same time, the lowest performing markets, Boston and St. Louis, also recorded the softest results at the high end, with luxury and upper-upscale hotels in those markets recording double-digit RevPAR declines.
While overall U.S. group demand declined slightly last week, several markets experienced meaningful gains driven by large events. Tampa posted the largest increase in group demand, supported by the Special Operations Forces (SOF) conference, which helped drive a 41.9% increase in RevPAR. Philadelphia also benefited from event-driven demand, with the ISPOR global health conference contributing to a 16.8% lift in weekly RevPAR. These localized gains illustrate how, even as national trends remain rate-driven, event-driven demand continues to produce outsized performance in select markets.
RevPAR advances globally
Global hotel RevPAR strengthened in the past week, rising 3.6% on a same-store and constant USD basis, excluding the U.S. The increase was ADR-driven, which was up 4.6%. Occupancy declined 0.7 percentage points to 73.2%. RevPAR was particularly strong in Canada, the Caribbean and in the Gulf Cooperation Council (GCC) countries — the latter due to Hajji pilgrimage to Mecca and Medina in Saudi Arabia. This was the first time that RevPAR was positive in the GCC since the start of the war in Iran.
RevPAR was down in all GCC countries, except Saudi Arabia. United Arab Emirates saw RevPAR decline by more than 50% with the remainder of the countries seeing more moderate decreases.
All countries in the Caribbean saw RevPAR advance except the U.S. Virgin Islands. Most of the islands saw double-digit gains.
Of the key larger countries, China, Germany and Mexico all saw RevPAR retreat. As in past weeks, Mexico’s retreat was ADR-led and mostly among higher-end properties. Germany’s decline was equally based on occupancy and ADR, while China was occupancy-led.
Cole Martin is Analytics and Insights Specialist at STR and Isaac Collazo is senior director of analytics at STR.