Market Recovery Monitor - 8 October 2022

For the week of 2-8 October 2022, U.S. hotel occupancy increased 1.9 percentage points (ppts) week on week (WoW) to 68.2%, which was aligned with historical trends and expectations. Excluding Florida, where demand was lifted by post-Hurricane Ian demand, occupancy was up 1.2 ppts WoW to 68.0%. Occupancy with Florida was also up 4.3 ppts compared with a year ago (+3.8 ppts without Florida). Nationally, the week started slow due to Yom Kippur but increased into the weekend, coinciding with school fall breaks and the Columbus/Indigenous Peoples’ Day holiday weekend. Nominal average daily rate (ADR) increased 2.6% WoW to US$154, which was 17% higher than in the comparable week of 2019 and 14% above a year ago. Nominal ADR without Florida increased 1.8% WoW. Nominal revenue per available room (RevPAR) was up 5.5% WoW to US$105, which was 13% higher than in 2019 and 21% better than a year ago. Nominal RevPAR without Florida increased 3.5% WoW.

Taking a closer look at the U.S. excluding Florida, weekday occupancy was down 2.2 percentage points on Tuesday and Wednesday due to Yom Kippur. Eight of the Top 25 Markets, excluding the three from Florida, saw weekday occupancy decrease by five or more percentage points week on week. Markets in that group included Boston, Chicago, New York City, Philadelphia, and Washington, D.C. Even with the decline, weekday occupancy in Boston and New York remained in the mid-to-high 70% range with Boston leading at 77.8%. Weekday occupancy in Chicago and Washington, D.C. was in the low 60s.

Occupancy was basically flat (-0.2ppts WoW) Sunday and Monday. From Thursday through Saturday, however, occupancy showed solid growth with a 1.1-percentage-point increase on Thursday and a 5.7-percentage-point rise on Friday/Saturday. That weekend jump was due to fall break for many schools, particularly in the south, as well as additional leisure opportunity via the extended weekend ahead of Columbus/Indigenous Peoples’ Day. According to STR’s School Break Report, half of all the K-12 schools that began the fall term in August were on fall break in the week that just ended and into the one current at the time of writing.  

For only the second time this year, and fifth since the start of the pandemic, weekend occupancy (excluding Florida) surpassed 80%. If you include Florida, weekend occupancy was 80.4% or 0.2 percentage points better. While good, nationwide occupancy for the same weekend in 2019 was 82%, as slightly less rooms were sold this year (-16,500) and supply is up 2%.  

Of the 153 STR-defined U.S. markets outside of Florida, weekend occupancy was above 90% in 15 markets with another 61 (40%) above 80%. There were no markets nationwide with occupancy below 60%, which was a first since the weekend of 15-16 July 2022. Gatlinburg/Pigeon Forge, Tennessee (97%) had the nation’s highest weekend occupancy even when including Florida and was followed by San Diego (94%). NYC had the nation’s fifth highest weekend occupancy at 93%.

For the entire week, market occupancy (excluding Florida) ranged from 89% in Vermont to 53% in the New Jersey Shore. If you include Florida, the nation’s lowest weekly occupancy was seen in Daytona Beach (51%). Even with the midweek religious observance, only 16 non-Florida markets reported weekly occupancy below 60%, which was the least amount of the past nine weeks. The largest year-over-year occupancy decrease was seen in Louisiana South (-19ppts), which a year ago saw elevated occupancy after Hurricane Ida. Among the major markets not in Florida, occupancy ranged from 58% in New Orleans to 80% in both Anaheim and New York City.

With subdued weekday occupancy, weekday nominal ADR (excluding Florida) fell for a second consecutive week, retreating 2.3%. Weekend ADR, however, jumped 6.3% WoW with the measure reaching its highest nominal level (US$176) ever recorded by STR. Inflation-adjusted (real) weekend ADR advanced to US$152, which was sixth highest level since 2000. For the full week, real ADR was US$133—slightly higher than the comparable time in 2019.

With strong weekend occupancy and historical nominal ADR, it is not surprising that weekend nominal RevPAR also advanced to the highest level ever recorded (US$141). Real weekend RevPAR (US$122) was the second highest on record, US$0.80 behind the level seen in the fourth weekend of July 2021. Full week real RevPAR was US$90 or 4% below the level seen in 2019.

Over the past 28 days, 49% of the 153 STR-defined markets excluding Florida, and 52% including Florida, were at “peak” real RevPAR (real RevPAR above 2019). That percentage was higher than a week prior. Another 46% of non-Florida markets (43% with Florida) were in “recovery” (real RevPAR between 80% and 100% of 2019). Seven markets, including Minneapolis, San Francisco, and San Jose were in “recession” as their real RevPAR was at just 70% of the 2019 comparable.

Florida/Hurricane Ian Focus
Florida’s weekly occupancy jumped 9.5 ppts WoW to 70.4%, which was nearly nine points higher than a year ago. ADR rose 11.8% WoW to US$158. The state’s highest occupancy was seen in Sarasota (83%), which gains of 28.5pts WoW and 21 pts YoY. Tampa and Orlando also saw large occupancy lift, both week on week and year over year. All markets saw week-on-week gains except Fort Lauderdale, where occupancy fell 1.3 percentage points to 71.3%. While Daytona Beach and the Florida Keys saw week-over-week gains, weekly occupancy remained on the low side (under 60%) and down from a year ago.

With the number of displaced residents, along with recovery workers, it was not surprising to see more than 28% of hotels in the markets affected by Hurricane Ian (from Fort Myers to Daytona Beach) with occupancy above 90%. The highest percentage of hotels with occupancy above 90% was seen in the Tampa East submarket, where 78% of reporting hotels were at or above that level. Tampa CBD/Airport, Tampa North/Busch Gardens, Bradenton/Airport, and Lakeland/Winter Haven all saw more than 50% of their hotel stock above 90% for the week. Overall, occupancy in the hurricane impacted areas (seven markets) was up four percentage points to a level of 84%.

In the most impacted areas, from Sanibel Island to Marco Island, STR research has found 13 hotels, mostly independent and small, were permanently closed or demolished by the hurricane. Seventy-five hotels (6,000 rooms) are temporarily closed with several having unknown reopen dates. STR is continuing manual research as well as weekly comparisons in daily data reporting to determine the status of hotels potentially impacted.

ADR growth in and out of hurricane-impacted area was nearly identical with the largest increase seen in Sarasota, where ADR increased 29% WoW and 34% YoY. Palm Beach, Miami, the Florida Keys and Fort Myers also saw strong ADR growth.

Around the Globe 
Outside of the U.S., occupancy fell 1.9 percentage points WoW to 63.2%. This was 6.9 percentage points behind the comparable week in 2019. Nominal ADR increased 2.4% WoW to US$145, which was 23% ahead of 2019 levels – an improvement on the previous week. Fifty-six of the countries tracked on a weekly basis saw a week-over-week drop in occupancy. 

The Czech Republic reported a 10.4-percentage-point increase in occupancy compared with the previous week, coupled with a 10.3% uptick in ADR. This was driven by the Czech Republic Provincial market, which saw a 16.1 ppt uptick in occupancy. Thailand saw occupancy increase 7.2 ppts WoW as the country ramps up to its high season. From an ADR perspective, the United Arab Emirates reported a 26.2% WoW increase to US$160, thanks to a 28.9% boost in Dubai – 28.9% ahead of where the market was in the previous year. Meanwhile, China saw a 3.7 ppt drop in occupancy to 47.1%, driven by ongoing pandemic restrictions. Northern Europe again saw the highest occupancy (79.7%) of any subcontinent, while Northeastern Asia reported the lowest (49.1%).

Over the past 28 days, 59 of the 344 STR-defined non-U.S. markets remained in “Recession” (real RevPAR between 50% and 80% of 2019) while 11 were in “Depression” (real RevPAR less than 50% of 2019). 

Big Picture 
While the week was well within our expectations, the weekend came in higher in the U.S. However, some of the difference, based on our analysis, has to do with the day of Yom Kippur, which was midweek and did not impact the Columbus/Indigenous Peoples’ holiday weekend. Also, K-12 fall breaks helped push up the weekend. We anticipate demand, outside and inside Hurricane Ian-impacted areas, to rise over the next two weeks before falling ahead of Halloween, which is on Monday this year and will negatively impact weekend and weekday occupancy in the U.S.