U.S. hotel occupancy is looking a lot like last summer, hitting the 70% range on average for the past four weeks.

However, past performance trends indicate that both occupancy and average daily rate are likely to take a sharp drop this week of the Fourth of July holiday, due to constricted business travel and despite increased holiday and leisure travel.

Occupancy is likely then to reach a peak for the year during the week of July 22, and then trend downward each week until the Labor Day holiday week.

A similar pattern is expected for the remainder of the world.

For the week ending July 1, weekly U.S. occupancy dropped to 69.9%, down 1.6 percentage points from the prior week and up 2.7 percentage points from last year.

The week-over-week drop was expected. Historically, when the Fourth of July holiday falls on Tuesday, hotel performance declines in the week prior. The last time the holiday fell on a Tuesday was 2017, and the matched week’s occupancy decline was 1.5 percentage points week over week, with weekends taking the biggest hit. Even last year, U.S. hotels recorded a significant week-over-week decrease ahead of the holiday week — down 5.1 percentage points. While demand for hotels has been softer in the second quarter, the week-over-week occupancy fall was more of a seasonal, normal occurrence versus something more serious.

Compared to the same week last year, average daily rate was up 1.5% to $156, and revenue per available room rose 5.7% to $109. It is notable that this is the first week since the pandemic when occupancy played a greater role than ADR in driving year-over-year RevPAR gains. ADR growth has also been below the rate of inflation for the past eight weeks. This represents a return to normal as business and group demand offset the nearly pure leisure demand of the past year.

Reflecting these more normal patterns, weekdays performed better in both the year-over-year and week-over-week comparisons than weekends and shoulder days.

• Occupancy on weekdays (Monday to Wednesday) increased by 3.3 percentage points year over year and 1.2 percentage points week over week — the best improvement of all day types.
• Occupancy over the weekends gained 2.4 percentage points year over year, but compared to the previous week, it was down 6.2 percentage points, a victim of the holiday shift.
• Shoulder (Sunday and Thursday) occupancy increased 2.3 percentage points year over year but fell 1.1 percentage points week over week.

The top 25 markets performed better than the industry overall with occupancy increasing 3.5 percentage points year over year and declining only slightly, by 0.6 percentage points, week over week. Compared to 2022, ADR rose 2.6% to $180 with RevPAR rising a healthy 7.7% to $133.

• Top 25 weekday performance was strong at 75.6% occupancy, up 4.9 percentage points year over year and 2.9 percentage points week over week. This week’s occupancy was less than a percentage point from the post-pandemic high reached two weeks ago. ADR for these key markets increased 5.5% year over year, resulting in a 12.9% RevPAR gain — the largest advancement of the past seven weeks. Twelve of the top 25 markets reported weekday RevPAR growth in excess of 10% including Atlanta, Boston, Chicago, Denver, Houston, Las Vegas, Minneapolis, Nashville, New York, St. Louis, Washington, D.C., and Philadelphia, which led the group with a 50.9% improvement.
• Weekend performance in the top 25 also improved as occupancy increased 2 percentage points year over year to 76.3% while decreasing 6.5 percentage points week over week. ADR decreased 2.2 percentage points year over, and RevPAR was relatively flat at a 0.4% increase.

Group demand among luxury and upper-upscale hotels increased 11% year over year, highlighting the continued growth in conventions, conferences and large group gatherings.

Global occupancy excluding the U.S was 70.7%, nearly at the post-pandemic high of 70.8% recorded two weeks ago. The measure was up 6.2 percentage points year over year as ADR rose 18% to $160. As a result, year-over-year RevPAR growth continued to be strong at 29.3%, attaining $113, the highest level since March 2020.

Among the top 10 countries, based on supply, occupancy increased 7.9 percentage points year over year to 73.8%, its highest level since the start of the pandemic and surpassing the previous high of 73.3% attained two weeks ago. Top 10 ADR grew 10.9% year over year to $146, and RevPAR increased 24.2 percentage points to $108. All top 10 countries posted positive RevPAR growth except Mexico, which declined due to falling ADR.

• For a seventh week, the United Kingdom led the top 10 countries in occupancy at 85.5%, up 1.1 percentage points from a year ago. Occupancy was also at its highest level since March 2020. ADR grew by 5% year over year, and RevPAR was up 6.4%.
• Japan’s hotels continued to post excessive RevPAR growth, up 86.1% and led by a 19.2% gain in occupancy and a 56.1% ADR increase.
• China also reported strong RevPAR growth of 49.1%, driven by an occupancy gain of 25.5 percentage points along with an 18.8% ADR increase.

Outside of the Top 10, destinations known well for leisure and holidays posted the highest occupancy again as they have for the past five weeks. As it has in seven of the past 10 weeks, Ireland led the world in occupancy at 90.8%, up 3.1 percentage points year over year.

Chris Klauda is senior director of market insights at STR, and Isaac Collazo is vice president 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.

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