Seasonality effects, including the start of a new school year in the U.S., are softening hotel performance around the globe, with some exceptions.
In the U.S., the top 25 markets have posted better occupancy gains than the rest of the country for 33 of the 35 weeks so far in 2023.
For the most recent week on record, ending Aug. 19, two top 25 markets achieved occupancy better than 80%: New York City and Oahu. Oahu hotel demand continues to be driven by evacuations from Maui, where deadly and destructive wildfires have displaced thousands.
Outside of the U.S., Canada’s hotel industry averaged 79.6% occupancy for the week, its highest level since March 2020. It was the peak week of the summer travel season for Canada. Additionally, several markets saw higher occupancy from evacuees fleeing the fires in northern Canada.
China’s hotel industry is surging back as travel to and from the country continues to open up. Weekly occupancy reached 77.4%, also its peak since the start of 2020.
Overall U.S. hotel demand has flattened compared to a year ago, but travel remains strong given that air travel, based on weekly TSA screenings, has been above 2019 levels in 23 of the past 24 weeks.
Americans, traveling internationally at much higher levels than their global counterparts, are helping to lift performance in other countries, but that comes at the price of softened hotel performance domestically.
Moving into the fall season, the industry is counting on business and group travel to advance, further propelling the industry’s return to normal. But through the week of Labor Day, which typically represents the seasonal low for summer travel, U.S. hotel occupancy is expected to continue to trend down. Global occupancy will also trend down as the leisure season comes to an end in the western hemisphere.
US Hotel Performance
With almost two-thirds of U.S. students in kindergarten through 12th grade back in school, hotel occupancy trended down for a fourth consecutive week.
Occupancy was 67% for the week, down 1.3 percentage points from the prior week, unchanged from a year ago and down 2.9 percentage points from the same week in 2019.
Weekly revenue per available room increased 1.8% year over year to $103, driven by a 1.8% increase in average daily rate to $154. Average daily rate gains took a step back following three weeks above 2%. Inflation-adjusted ADR remained just under the 2019 level.
Occupancy in the top 25 markets grew by 0.7 percentage points year over year to 68.6%.
Occupancy outside the top 25 markets came in at 66.1%, down 0.5 percentage points year over year. RevPAR for the top 25 markets increased 3.2%, fueled by an ADR increase of 2.1%. In the remainder of the country, ADR grew 1.5%, resulting in a RevPAR increase of 0.9%.
The nation’s highest occupancy for the third consecutive week was in Alaska at 89.5%, followed by Oahu at 88.4% and Portland, Maine, at 85.9%.
The devastating fires on Maui caused a 27.8% year-over-year decline in room demand in that market, but continued contributing to Oahu’s occupancy performance. Based on CoStar hospitality research and individual hotel reporting status, five properties representing 1,904 rooms in Maui have sustained damage or were destroyed. That total represents roughly 2% of room supply in the Maui market.
New York City occupancy increased 6.3 percentage points to 83.7%, resulting in a 19.7% gain in RevPAR, the highest increase across all top 25 markets, assisted by a healthy 10.7% ADR increase.
Overall, weekday occupancy increased 1.5 percentage points across the top 25 markets. Many posted even higher growth, led by Detroit’s 8.4-percentage-point gain in occupancy and including Atlanta, Las Vegas, Minneapolis and Houston — all improving by more than 2 percentage points.
Global Performance
Global performance excluding the U.S. showed a marginal week-over-week decrease in occupancy, down 1.2 percentage points to 72.1%. While occupancy was down from the prior week, it was up 4.4 percentage points year over year. ADR was up 12.8% year over year to $154 and has been above $150 for the past 11 weeks. RevPAR came in at $111, up 20.2% year over year.
The top 10 countries by supply posted occupancy of 73.7%, up 5.4 percentage points year over year but down 2.4 percentage points from a week ago. ADR grew 9.5% year over year to $143. An 18.2% year-over-year improvement in RevPAR to $105 marked the eighth-best result of the year.
Within in the top 10, France, Italy and Germany reported slight year-over-year declines. The U.K had both the highest occupancy of the top 10 at 81% and the largest year-over-year gain of top 10 markets in Europe.
Overall, the largest occupancy gainers are those in Asia, led by China with an improvement of 13.2 percentage points year over year to 77.4%, its second-highest occupancy since March 2020. Indonesia occupancy was up 6.8 percentage points to 64.3%. Occupancy in Canada was the third highest of the top 10 at 79.6%. The week’s level was Canada’s highest since March 2020. In Spain, occupancy grew to 80.6% with ADR rising 3.3%. Rates in Spain have been at their highest levels over the past three weeks. This most recent week’s ADR was 22% higher than the comparable week of 2019.
Isaac Collazo is vice president of analytics at STR. Chris Klauda is senior director of market insights at STR. William Anns is a research analyst 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.