U.S. hotel supply ramped up as temporarily closed hotels reopened to meet the summer travel demand, and having more rooms to fill dampened occupancy gains following the Memorial Day weekend surge.

For the week ending June 5, STR data shows the U.S. hotel industry regained 16,000 rooms, which shaved a tenth of a percentage point off weekly occupancy. As of June 8, 402 hotels representing 96,000 total rooms were still closed in the U.S. Nearly half (46%) of those closed hotels are in just three markets: New York, Orlando and Chicago.

Hotels reopening are a sign of the recovery, but industry revenue still is in a recession compared to pre-pandemic 2019 levels.

STR’s Market Recovery Monitor shows that revenue per available room for the week of June 5 was just 77% of the level achieved during the same week in 2019.

That is the highest level of the past 65 weeks, and the index has risen in each of the past weeks, lifted by leisure travel demand and in part by the calendar shift of the Memorial Day holiday.

But RevPAR would have to reach 80% of 2019 levels for the industry to be considered in “recovery” and beat 2019 to be in “peak” performance, according to the STR index.

On a 28-day moving average, 64% of all U.S. markets posted “recovery” or “peak” performance for the week, with RevPAR reaching 80% or more of 2019 levels. Nine markets — including San Francisco, Washington, D.C., New York and Boston — remained in the “depression” category, with RevPAR at 50% or below of 2019 levels.

The trajectory of the recovery indicates the industry will take years, not months, to return to pre-pandemic performance levels. In the summer months ahead, leisure demand is expected to continue to drive the recovery, but that will taper off in the fall, when rising business demand will be important to sustain the momentum.

Room demand continued to increase week to week, but by the smallest amount of the past four weeks, and U.S. hotel occupancy was 61.9%, a slight increase of 0.2% from the previous week. On a total-room-inventory basis, which accounts for temporarily closed hotels, weekly occupancy was 59.2%, flat from the previous week.

Half of all U.S. markets experienced gains in room demand, led by Orlando which sold 31,000 more rooms than the previous week. Even with the increased demand, Orlando occupancy was only 53% on a total room inventory basis — well below 2019 levels.

In the Florida Keys, which has led the nation in hotel occupancy for nearly the entirety of the pandemic, weekly occupancy was 87%. Meanwhile, San Francisco hotel occupancy was 42% — among the markets with the lowest weekly occupancy, which also include Washington, D.C., New York and Boston.

Over the weekend, total room inventory occupancy was 71%, compared to 75% over Memorial Day weekend.

Weekend — Friday and Saturday — occupancy got a boost from Memorial Day and reached its highest level since the start of the pandemic at 55%, despite daily occupancy being lower every day but Sunday and Thursday.

At the hotel level, 61% of hotels reported weekly occupancy above 60% for a second consecutive week, and 5% of hotels had weekly occupancy below 30%.

The largest numbers of hotels with weekly occupancy under 30% were in Washington, D.C., Minneapolis and Chicago, which accounted for approximately 10% of hotels in that category. That means low-performing hotels are scattered throughout the nation. Most of them are small- to medium-sized hotels.

Large hotels with 300 or more rooms posted weekly occupancy of 49%, up slightly from the previous week. Occupancy at small hotels continued to be strong at 65%.

U.S. hotel average daily rates increased for a seventh consecutive week, led by markets outside the top 25. Rates gained the most during the week, which included the Sunday of the Memorial Day holiday. Rates over the weekend (Friday and Saturday) decreased for the first time in seven weeks, down 7.1% as the previous week’s results benefited from the Memorial Day holiday.

Overall, 40% of U.S. markets and 48% of all hotels reported a decline in weekly ADR.

Isaac Collazo is VP Analytics 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.