U.S. hotel revenue per available room fell 0.5% in the week ending Aug. 16, buffeted by difficult year-over-year comparisons due to 2024 storms in Houston. That market alone accounted for 5 basis points of the RevPAR decrease, but Houston was not alone as 47% of all markets saw RevPAR decline by more than half a percentage point — the most markets down of the past four weeks.
Drops in occupancy drove the nationwide RevPAR decline, and average daily rate rose a mere 0.4%.
Weak business travel causes weekday slowdown
Slowing weekday occupancy, particularly in the top 25 markets, had the largest impact on the week. Business travel, which is best represented by weekday performance, has plateaued.
Leisure travel continued, as evidenced by strong weekend performance, however it is not enough to carry the industry.
Weekday occupancy declined 0.7 percentage points with ADR up only 0.3%, reducing RevPAR by 0.9%. Weekend RevPAR advanced 0.3% on ADR, up 0.6%, with a 0.2 percentage point drop in occupancy.
Notable differences appeared across the top 25 markets compared to other markets. Weekday RevPAR in top 25 markets fell 2.3%, and weekend RevPAR fell 1.3% due to drops in occupancy.
Overall, weekly RevPAR dropped by 2% across top 25 markets. Excluding Houston, weekly RevPAR was down 0.9% overall with negative weekdays — down 1.3% — and a flat weekend.
RevPAR was somewhat better in other metro areas outside the top 25, with weekday and weekend RevPAR up 0.2% and 0.3%, respectively. For the full week, those markets collectively increased RevPAR by 0.2%. Non-metro and rural areas posted the largest weekly gain — up 0.7% — with the weekend advancing 1.9% while weekdays were up just 0.1%.
Summer’s end nears
This has been the weakest summer of the past four years, and we only have two more weeks left of the 2025 summer travel season.
Demand is down 1.4 million room nights compared to the same period last year. RevPAR has declined 1.1% as occupancy dropped and ADR increased just 0.2%. The demand retreat has come mostly from economy hotels with 45% of its decline centered in 10 markets — Houston, Las Vegas, Los Angeles, Arkansas Area, Texas South, Myrtle Beach and New Jersey Shore.
Houston and Las Vegas account for nearly a quarter of the economy hotel decrease. Midscale and upper-upscale class hotels have also seen a decline over the summer but to a lesser extent. They only make up 20% combined of the total room nights lost this summer.
Luxury, upscale and upper-midscale have all gained about the same number of room nights this summer — roughly 438,000 each — but their combined growth was insufficient to offset the decreases from the other classes.
Looking ahead
The next couple of weeks through Labor Day are expected to see more of the same. With schools in session across much of the country, leisure travel will continue to slow, and business travel is unlikely to fill in the gap during the fortnight.
The impact of Hurricane Erin will be seen in next week’s results along with continued headwinds from Houston’s storm comparisons. Chicago will see a slowdown impacted by the comp to the 2024 Democratic Convention. Difficult comps from Hurricanes Helene and Milton are also on the horizon.
Isaac Collazo is senior director of analytics at STR. Chris Klauda is director of market insights 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.