Weekly demand for U.S. hotels dipped from the expected annual peak and is likely to continue on a downward trend in the coming weeks. At the same time, global hotel occupancy excluding the U.S. continues to inch up, setting new records each week.
While at a slower pace than a year ago, U.S. demand has advanced, especially in the top 25 markets and on the weekdays. However, with summer’s end on the horizon, business and group travel will have to increase more to make up for the loss of demand from leisure travelers.
The low point for U.S. hotel demand is likely to be the week of the Labor Day holiday as families prepare for the start of the school year. Approximately 10% of U.S. students in kindergarten to 12th grade are set to start school next week, according to STR's School Break report.
Outside the U.S., hotel performance is helped by easier comparisons to 2022, when some countries were still under COVID-19-related travel restrictions. Those easier comparisons are expected to linger through most of the year.
US Performance
In the final week of July, U.S. hotel occupancy reached 72.2%, which represented a slight decline of 0.7 percentage points from the previous week’s post-pandemic high of 72.9%. Compared to a year ago, occupancy was up 0.4 percentage points. Occupancy for the same week in 2019 was 77.2%.
Among the other key measures, revenue per available room increased 2.9% year over year, primarily as a result of average daily rate increasing 2.3%. It was the largest year-over-year ADR growth of the past six weeks.
The top 25 hotel markets again outperformed the rest of the country, with occupancy up 2.2 percentage points year over year to 76.4%. That percentage matched the previous week’s level, which was the highest since late 2019.
RevPAR for the top 25 markets increased a healthy 5.8% year over year, which was the second-highest gain this summer fueled by the strong occupancy and a solid ADR increase of 2.8%.
Two top 25 markets reached record highs in occupancy for the week:
- Oahu led the nation in occupancy at 90.7%, its highest level since January 2020 when it reached 92%.
- Orange County/Anaheim, California, at 87% reached its highest occupancy since August 2019.
Outside of the top 25, the Buffalo and Albany, New York, hotel markets posted their highest occupancies since January 2019 at 86.8% and 82.2%, respectively. More than half of the 167 markets posted occupancy above 70% for the week.
Global Performance
Global occupancy excluding the U.S. inched up 0.3 percentage points week over week to 72.8%, resulting in another post-pandemic high and a year-over-year gain of 5.2 percentage points. For the same week in July 2019, the peak of that year, occupancy was 75.9%.
Global ADR for the last week of July continued to stay over $150 at $154 and rose 10.5% year over year, resulting in RevPAR of $111, up 19% year over year.
For the top 10 countries based on total supply, weekly occupancy grew 6.4 percentage points year over year to 75.2%, the third-highest result of the year. ADR grew 6.8% year over year to $142, resulting in a 16.6% increase in RevPAR to $107.
Combined global occupancy for countries outside of the top 10 has been climbing throughout the year and this week reached a post-pandemic high of 69%, up 3.3 percentage points year over year.
China recorded a new post-pandemic occupancy high, outside of national holidays, at 76.1%. The year-over-year gain was 10.4 percentage points as this time last year large Chinese cities were still facing lockdowns and “closed loop” manufacturing.
The U.K. continues to lead the top 10 with occupancy at 83.2%.
Across Europe, Italy continued to post some of the largest year-over-year gains in ADR — up 12.3% year over year — likely assisted by boosted transatlantic travel from dollarized countries.
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.