Texas hotels continued to benefit from demand as a result of a severe winter storm two weeks ago that displaced residents and left widespread water issues likely requiring teams of insurance adjusters to assess the damage.
Occupancy in the state reached another pandemic high of 57.3% during the week of Feb. 22, surpassing the previous week’s level by a full point. Demand — the number of rooms sold — strengthened considerably over the fortnight with the state's hotels selling 87% of the rooms sold during the same two weeks in 2019. Texas also led the nation — ahead of both Florida and California— with the most rooms sold in the week at 2 million.
Most Texas markets posted weekly occupancy gains. McAllen/Brownsville was the notable exception, dropping 4 points of occupancy week over week but remaining a state and national leader with occupancy of 68.1% — the seventh-highest across all 166 U.S. markets.
Occupancy for the five largest Texas markets — Austin, Dallas, Fort Worth/Arlington, Houston and San Antonio — ranged from 52.5% in San Antonio, which was also the lowest occupancy market in Texas, to 62% in Fort Worth/Arlington. Austin and Dallas hotels posted their highest weekly occupancy levels since the start of the pandemic — at 57.9% and 55.7%, respectively.
Occupancy strengthened considerably as the week progressed, topping over the weekend at 66.5%, the highest level since the weekend of Oct. 10, 2020. Many Texas markets neared the occupancy levels recorded during the same weekend in 2019.
The percentage of Texas hotels with occupancy below 30% continued to drop, with only 10% of hotels at that level versus 12% a week ago. Medium-sized hotels — with 75 to 299 rooms — posted the most notable improvement over the week as more than 61% of them had occupancy levels at or above 60% for the week, which is also the most since the start of COVID-19. Large hotels — 300-plus rooms — continued to be the most affected by COVID-19 but also posted improved performance in the week. The percentage of large hotels with occupancy levels below 30% fell from 47% to 42% week over week. Three weeks ago, more than 70% of all large Texas hotels reported occupancy below 30%.
Weekly average daily rate softened, down 1.7% from the prior week and down 25.7% year over year. Weekend ADR, meanwhile, posted solid growth — up 3.7% week over week. Markets that popped over the weekend included Fort Worth/Arlington with a 9.6% ADR increase over the previous weekend; and San Antonio, where hotel rates were up 8.2% week over week. However, ADR in both markets was down from the same period last year.
STR, CoStar's hospitality analytics firm, expects Texas hotel occupancy will continue to increase due to lingering water damage issues along with the emergence of spring break, which will likely be strengthened with the recent lifting of all pandemic-related regulations in the state.
More on US Weekly Performance
Weekly U.S. hotel occupancy fell slightly — down 0.6 points week over week — for the week ending Feb. 27, marking the first week-over-week decrease of the past five weeks. Room demand fell by 206,800 after increasing by more than 1 million rooms in each of the previous two weeks. Florida, California and New York hotel markets all posted room demand declines for the first time in seven weeks with those three states accounting for most of the nationwide decrease.
Other states reporting gains included Oklahoma, Alabama, Tennessee and Missouri, where room demand for each increased by more 30,000 rooms in the week. U.S. room demand was about 72% of levels posted during the same week in 2019 — that percentage has been increasing, but at a snail’s pace.
Weekly occupancy was down nearly two points in the U.S. top 25 markets but up slightly in all other markets combined. At the market level, Orlando reported the largest decline in weekly room demand — down 45,300 — with occupancy falling to 45% after achieving 50% the prior week.
Other markets reporting declines in room demand included Miami, Portland, New York City and Phoenix. Markets posting the largest gains were mostly large rural/geographic areas in states including Arkansas, Kansas, Mississippi and Southern Missouri. In total, 80 markets reported room demand increases in the week — the least since early January. Additionally, only 13 markets posted demand growth by more than 10,000 room nights, compared to 36 markets the previous week.
While nationwide hotel occupancy was down for the week, only 20% of hotels reported occupancy below 30% — the lowest percentage since mid-October and trending downward. More importantly, one-third of all hotels reported weekly occupancy above 60%, which was up very slightly from the prior week.
Week-over-week ADR also fell 4.9% nationwide as 113 markets reported week-over-week ADR decreases — the most since the start of the year. The biggest week-over-week ADR declines were in large rural/geographic markets.
Isaac Collazo is VP Analytics at STR.
This article represents an interpretation of data collected by CoStar's hospitality analytics firm, STR.