U.S. hotel demand overcame a soft Memorial Day weekend as post-holiday travel drove the largest year-over-year increase in room demand of the month in the week of May 24-30.
Room demand was down 0.8% on Sunday, May 24, marking three consecutive days of demand decline leading into Memorial Day on Monday. In the days that followed, U.S. hotel demand reversed course, finishing the week with a 2.4% year-over-year lift including a 3.9% increase from Monday to Thursday.
Overall U.S. hotel performance was aided by this lift in demand but the 6.5% increase revenue per available room (RevPAR) last week was once again primarily driven by a 4.5% increase in average daily rate (ADR). This was the thirteenth consecutive week of increased ADR and the fifth consecutive week that ADR growth has exceeded room demand. That stretch continued to reinforce the rate-led nature of U.S. hotel performance even as demand improved following the holiday. More importantly, ADR has been at or above the rate of inflation (~3.8%) for the past three weeks.
Memorial Day weekend
From Friday to Sunday of Memorial Day weekend, U.S. hotel occupancy reached 71.1%, the lowest Memorial Day weekend level of the past six years. This was largely driven by a weaker Saturday occupancy (78.9%) that was 2.2 percentage points less than the three-year average for Memorial Day Saturday. Overall room demand was down 1.9% year-over-year on Saturday and 1% for the weekend. A likely contributor was calendar timing, as 5% fewer public-school students were on summer break during the holiday period than last year.
Among branded hotels, approximately 23% of the total Memorial Day weekend demand decline came from economy hotels. These hotels have seen consistent weekday demand gains since February. However, weekend demand has been flat to down for the last six weeks with the Memorial Day decrease the largest of the six. Overall, non-branded (independent) hotels accounted for most of the Memorial Day decline.
Despite the decline in holiday demand, RevPAR increased 2.4% year over year due to a 3.9% lift in ADR. Friday through Sunday ADR was $178 this year, which is the highest Memorial Day weekend ADR on record. This year’s ADR was up just 0.4% versus a year ago and 8.5% below 2022, which on an inflation-adjusted basis, was the highest ADR recorded for the three-day holiday.
Luxury and upper-upscale hotels were responsible for the Memorial Day weekend RevPAR lift, as they were the only group to post positive growth over the weekend. Holiday weekend ADR for these hotels was up 6.5% year-over-year, with luxury accounting for most of the gain. While the holiday weekend underperformed on the demand side, rate growth at the upper end of the market was enough to keep RevPAR positive.
Post-holiday performance
Following the holiday weekend, year-over-year hotel performance surged from Monday to Thursday. RevPAR across these weekdays increased by 8.1% with an ADR lift of 4.5% and a 3.9% increase in rooms sold. Weekday growth was widespread but the Top 25 U.S. hotel markets saw the largest increase with RevPAR increasing 9.8% and 11 of the 25 markets seeing double-digit RevPAR growth.
Group demand for luxury and upper-upscale hotels was up 4.7% from Monday to Thursday last week. That gain, combined with stronger weekday performance in larger urban markets, points to a meaningful rebound in business-oriented travel following the holiday. Metropolitan markets and rural areas benefiting from AI data center demand highlighted this strength. Overall hotel room demand for the top 25 markets was up 3.8% from Monday to Thursday, while weekend demand from Friday to Saturday was comparatively flat at a 0.8% increase. The split between post-holiday weekday strength and softer weekend demand was one of the defining features of the week.
For the full week, nine of the top 25 U.S. hotel markets saw double-digit RevPAR growth. Las Vegas saw the largest increase with RevPAR soaring 33.6%. Las Vegas started the week with a Sunday occupancy of 89.9% as the market hosted multiple concerts including performances from BTS and the Jonas Brothers. Concert-driven compression continued through the week as BTS performed two additional nights at Allegiant Stadium, overlapping with shows at the Sphere and Caesars Palace.
Similar to BTS, Morgan Wallen continued to drive hotel performance at each stop along his tour. His two shows in Denver last week, combined with attendance from Fan Expo Denver and Outside Days, led to a 32% RevPAR increase in the market. Wallen's show dates overlapped with the Fan Expo and Outside Days on Friday and Saturday, resulting in a 91.4% increase in weekend RevPAR and an occupancy of 94.1%.
Last week was the first time since April that every class of hotels increased in RevPAR. While growth was seen across the board, Luxury hotel performance continued to separate from the rest. For the fifth consecutive week, luxury hotels led all classes in RevPAR growth (+14% last week). That outperformance reflected the strongest pricing power in the industry, with higher-end travelers remaining comparatively resilient.
Highest global RevPAR growth since late February
At 9.2%, global RevPAR, on a comparable and constant U.S. dollar basis excluding the U.S., was up by its highest amount since before the war in Iran. Like the prior week, the gain was driven by Gulf Cooperation Council (GCC) countries, where RevPAR rose 58% due to the annual observance of Eid al-Adha, the second and holier of the two main Islamic holidays. RevPAR in Saudi Arabia rose by 106%. Nearly all the council countries saw RevPAR gains, which ranged from 25% in Kuwait to 60% in Bahrain. United Arab Emirates was the only country to post a RevPAR decrease, but its decline was modest versus previous weeks (-1.1%). Overall, the GCC growth was driven by ADR.
Most of the world saw RevPAR advance in the week except for Mexico (-8.5%) and Germany (-16%). The decline in Mexico was driven by Cancun, Mexican Caribbean and to a lesser extent Pacific Central. RevPAR in the remainder of country was up 2.7% on nearly equal gains in occupancy and ADR.
Germany’s decline was driven in part by Munich, where RevPAR fell by more than 58% due a trade fair shift. It alone accounted for half of the country’s decrease. On the opposite side, Dusseldorf rose by 74%, mostly on ADR.
The Caribbean, Canada, China, France, India, Italy, Japan and U.K. all saw RevPAR grow by more than 7% in the week, with ADR the primary driver.
Cole Martin is Analytics and Insights Specialist at STR and Isaac Collazo is senior director of analytics at STR.