The week of Oct. 19-25 was a bad one for the U.S. hotel industry. Revenue per available room dropped 5.3% year over year on falling average daily rate and occupancy.
Since May, weekly U.S. hotel occupancy has increased just twice with the measure falling 2.5 percentage points in the most recent week. ADR was down 1.7%, which was the first weekly decrease in a month.
The top 25 U.S. hotel markets influenced the national average as RevPAR for the group fell 8.1%. The remainder of markets reported RevPAR down 2.5%. Unlike previous months, we can’t put too much blame on Las Vegas as it only accounted for 140 basis points of the decrease in the top 25 markets and 90 basis points of the total industry’s decrease.
While there was no calendar shift affecting U.S. hotel performance the week of Oct. 19-25, it is important to note that the comparable week in 2024 produced a 9.6% increase in RevPAR, driven by the largest occupancy gain up to that point of the year. ADR also grew that week at one of the fastest rates of 2024. U.S. hotel demand during the comparable week last year was also the eighth highest post-pandemic and among the best all time. As a result, last year’s performance growth was widespread with RevPAR up by more than 10% in the top 25 markets.
Hurricane markets – those affected by Hurricane Helene and Milton in 2024 – also lifted last year’s RevPAR results by 24.3%, contributing 70 basis points to the U.S. total. This year, hotel RevPAR in those markets were down 15% and accounted for 50 basis points of the decline. So, it could be said that this week had somewhat difficult comparisons.
Immunity to the RevPAR decline was few and far between
To understand how widespread this week’s decline was, we looked at property-level data. On a same-store basis, nearly half (49%) of U.S. hotels saw RevPAR fall by 5% or more, which was the most of the past seven weeks, and nearly a quarter saw a decrease of more than 20%. Among the top 25 markets, 55% of properties saw weekly RevPAR decline by 5% or more with 44% reporting double-digit decreases.
Nine of the top 25 markets saw RevPAR decline by more than 10% with Las Vegas, New Orleans, Tampa, and Washington, D.C. falling by 20% or more. While most of these markets were driven by a steep decrease in occupancy, New Orleans saw its weekly ADR drop by more than 35% due to a difficult comp from last year’s Taylor Swift Eras Tour (Oct. 25-27, 2024). Miami also had difficult comps from the same tour with ADR down 23.5% on Sunday.
In all, 19 of the top 25 U.S. hotel markets reported a RevPAR decrease, including New York City, which was down 0.7% on falling occupancy.
Government shutdown affecting DC
Washington, D.C. has had a difficult year with RevPAR from April to September down 6.7% on falling occupancy and ADR. October month-to-date RevPAR is down 7.6%, but that is not as bad as other top 25 markets such as Atlanta, Houston, Miami, New Orleans and Tampa.
During the week of Oct. 19-25, D.C. hotel RevPAR dropped 23.8%. This was among the worst performance of the key markets, which is likely due to the ongoing government shutdown. But another factor is conference shifts, particularly the annual meetings of the International Monetary Fund and the World Bank Group, which was two weeks earlier this year.
A year ago, D.C. market RevPAR increased 22% on a 15.9% ADR increase, and nearly all submarkets reported double-digit gains, led by the D.C. central business district with RevPAR up 29.7% on a 27.4% ADR increase. This year, the central business district’s RevPAR fell 32.9% via a 22.7% ADR decline. While the ADR decline didn’t fully erase the growth from last year, the demand side certainly did, illuminating the impact of the government shutdown. A year ago, the market saw demand grow by 36,600 room nights with the central business district contributing 5,900 room nights. This year, demand in Washington, D.C. fell by 64,000 room nights with a third of the decline coming from the central business district.
Group demand down against last year’s post-pandemic record
Group demand in luxury and upper-upscale class hotels fell for a second consecutive week, down 5.7% for the most recent period. In the comparable week last year, group demand reached its highest level of the year and the highest post-pandemic. In fact, the number of group room nights sold in the matching week last year was the ninth highest since STR began weekly tracking of groups and less than 100,000 room nights from the all-time weekly record set in 2018.
RevPAR was down in every class of hotels with luxury hotels falling 3.8% and most classes seeing a decline of more than 5%. The only exception was economy hotels, where RevPAR fell by 10%.
What to think?
It is rare that we blame a down week for U.S. hotels on difficult comps when there is not a calendar or event shift. But this was one of those weeks as last year’s results were stellar.
What the results don’t show is that U.S. hotel demand for this week was among the highest since 2000 (138th of 1,348 weeks). Thus, while we recoiled at the sharp RevPAR decline, we must keep in mind that rooms are being sold. That being said, the week’s decrease will impact the month’s result. We now expect U.S. October RevPAR to fall by roughly 1%. A week ago, we were expecting a flat to slightly down month.
Another good week for most other countries
Excluding the U.S., global hotels on a same-store basis had another solid week with RevPAR up 6.5% on ADR growth of 6.6%. Global hotel occupancy fell for a second consecutive week but stayed above 75%. ADR growth was led again by France (+14.8%) with RevPAR increasing by a similar amount. Other countries seeing strong RevPAR growth from ADR gains included Japan, Italy and Spain.
Italy and Spain saw double-digit RevPAR growth from double-digit ADR gains. RevPAR in Spain was up 10.4% on an 8.6% ADR increase.
Countries and areas that saw weekly RevPAR decreases included China (-0.2%), the Caribbean (-3%) and India (-37.6%), which we attribute to Diwali (Deepavali) observance.
Like in the previous week, France’s stellar gain was grounded in Parisian hotels, where RevPAR increased 28.6% on a 25.4% ADR gain. In total, 10 of the country’s 12 markets saw growth with eight posting double-digit RevPAR increases. Provence-Alpes-CDA and Ile-de-France were the only two markets down, with RevPAR falling in both by more than 20%.
Of the 17 markets in India, all but four reported RevPAR declines with many down by more than 30%, including New Delhi and Mumbai, which were down by 50%.
Canadian same-store RevPAR increased 6.7%, which was almost identical to the previous week’s gain. Strong RevPAR gains were reported by hotels in Toronto (+26.5%), Vancouver Island (+14.4%) and Ottawa (+12.8%).
Isaac Collazo is senior director of 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.