Following Labor Day in the U.S., all eyes are on corporate, midweek demand.
According to the latest monthly data from STR, CoStar's hospitality analytics firm, U.S. occupancy stood at 63% in August, a six-point drop from the previous month. However, this decline was expected due to leisure vacations ending and children returning to school.
"This softening then meant that the [revenue per available room] index compared to 2019 once again fell below 100," Jan Freitag, national director of hospitality analytics for CoStar Group, said in his monthly video analysis of U.S. hotel performance.
"Weekend occupancies have benefited from healthy leisure demand, but now that we are after Labor Day, all eyes are on midweek, corporate demand," he added.
The delta variant continues to throw a wrench in return-to-office plans for businesses, as companies like Amazon and Google are keeping employees at home until next year.
Freitag expects weekend occupancy and rate will continue to be strong, but midweek performance will look vastly different. Without healthy group demand, it's difficult to envision a recovery across the board.
"It's interesting to look at how Americans think about attending gatherings. If you're paying with your own dollar, you're probably going. But if it's a corporate trip, companies are probably saying you're not going," he said. "Interesting to see how those two things intersect and what that means for the fall."
Will International Travel Return?
In addition to average daily rate growing at a healthy clip during the past 8 months, Freitag said when adjusting 2019 ADR for inflation, the current ADR is 7% higher.
It's clear that Americans are choosing to spend money they saved in 2020 for experiences this year, which is allowing hotels to exert pricing power.
"The question is, how long can that last?" he said. "To get more ADR support, a lot of operators are banking on the return of the international travelers."
Some hope stems from the Biden administration this week announcing the easing of restrictions for fully vaccinated travelers coming into the U.S.
When looking at international inbound and outbound travel numbers for the first 6 months, Freitag said two things stood out.
"For one, travel volume has basically collapsed during COVID, whereas Americans took 22 million international trips in 2019. This year, that number was only 6 million.
"In addition, it's interesting that the net number of Americans traveling out of the country back then and now is around 3 million higher than the number of international travelers coming to the U.S.," he said.
For Freitag's full insights, watch the video above.