Despite travel hassles and some local challenges, the U.S. government shutdown didn't ding overall hotel performance in October in a significant way, according to CoStar data.
On this month's episode of Tell Me More: A Hospitality Data Podcast, co-hosts Isaac Collazo of STR and Jan Freitag from CoStar Group tackle two main topics: October hotel performance in the U.S., and the role ultra-luxury hotels play in propping up collective numbers.
First, October numbers and the government shutdown: Revenue per available room and occupancy fell for the month while average daily rate was up 1.5%, "the best increase of the past six months," Collazo said, though still well below the rate of inflation.
And while total room night occupancy during the shutdown was down significantly more so than it was before the shutdown, Collazo reminds listeners that we can't blame the government for all of that, because the shutdown period coincided with 2024's hurricane period.
Recently released TSA data shows screenings during the shutdown period were up 2%.
"Folks aren't talking about that," Collazo said. "A lot of us were traveling during that time period — if you had to travel, you traveled, right? For business, we traveled. It was an inconvenience, but you didn't stop."
"There was just so much to happen this month," he said. "It really was actually a decent month, all things considered. ... Still not a great month, but it wasn't as bad as I think people feared."
Ultra-luxury stays strong
This month, both Freitag and Collazo analyzed elements of what they consider "ultra-luxury" hotels — how they compare with standard luxury-class hotels and how their performance is a high tide, raising the boats of other classes.
Freitag segmented out hotels around the world commanding the highest ADR in their markets. He found that while those hotels are consistently able to command double the rates of their standard luxury counterparts, they also post much lower occupancy levels.
"I think it's part of the allure," Freitag said. "Part of ultra-luxury is exclusivity. And when I talk to operators, they say they have guests who just show up ... with their entourage, we need to be able to accommodate that, and if you're running a lower occupancy, you can do that."
Collazo analyzed a set of 319 U.S. hotels that fit an ADR criteria that makes them stand out from other standard luxury hotels.
He compared their October performance to the rest of the hotels in the country, showing that the ultra-luxury hotels collectively commanded RevPAR growth of 9.1% and ADR gains of 4.1% in the month.
Excluding those super-high-end hotels, U.S. total hotel RevPAR would have been down 1.3% in October, instead of 0.9%.
"That's a 40 basis-point shift from 319 hotels." he said.
Also in this episode:
- Freitag unpacks the latest U.S. hotel forecast revision from CoStar and Tourism Economics, explaining the external economic and political shocks that factored into 2025's downward trajectory.
- Freitag points out the continuing trend worrying him, that "GDP growth and [hotel] demand growth have been disassociated and they're not growing in lockstep anymore."
Referenced in this episode:
- A tale of two hotel segments: Luxury vs. ultra-luxury, by Jan Freitag