STR Weekly Insights: 10-16 September 2023

Analysis by Chris Klauda and Isaac Collazo

Countries included: United States, Canada, China, Curaçao, Denmark, Fiji, France, Germany, Indonesia, Ireland, Italy, Japan, Kenya, Lebanon, Mexico, Nicaragua, Singapore, Spain, Sri Lanka, and the United Kingdom.

U.S. Performance

U.S. hotel occupancy (67.7%) was both helped and hindered by calendar shifts. Occupancy showed a significant week-over-week increase, up 7.4 percentage points (ppts) from the period that included the Labor Day holiday. At the same time, occupancy was down 1.5 ppts compared to the same week last year due to the shift of the Rosh Hashanah observance, which occurred over the weekend on 15-17 September. Last year, the observance was a week later on 25-27 September. Compared to 2019, the week’s occupancy was down 1.5ppts, also impacted by the shift of Rosh Hashanah. While these calendar shifts impact weekly reporting, overall industry performance remains in line with our expectations.

Average daily rate (ADR) increased 7.0% from last week and 2.3% year over year (YoY) to US$161. This was the first weekly gain above 2% of the past four weeks. Revenue per available room (RevPAR) increased week over week (Wow) to 20.1%, helped by the significant occupancy boost, while remaining flat YoY at US$109.  

The influence of the Rosh Hashanah calendar was seen in daily performance with Thursday through Saturday occupancy down YoY by 2.1ppts, 4ppts, and 4.4ppts, respectively. As has been observed throughout most of 2023, weekdays continue to see stronger performance with occupancy up 0.5ppts YoY on Monday and up 0.2ppts on Tuesday. Wednesday decreased slightly, down 0.5ppts.

The Top 25 Markets saw their second highest weekday (Monday – Wednesday) occupancy of the year (76.1%), up 0.9% YoY. So far, the highest weekday occupancy of 2023 was 76.4%, achieved in the week ending 17 June. Top 25 weekend performance followed a similar pattern seen across the industry as occupancy declined Thursday through Saturday.

The most significant differences across Top 25 daily performance was seen in ADR and RevPAR. Top 25 ADR increased 2.2% with weekdays four times stronger, up 8.8% with the highest weekday ADR of the year at US$211. This was also the second time this year that Top 25 weekday ADR surpassed $200. The previous time was in early spring. The boost from weekday ADR, along with increased occupancy, resulted in Top 25 weekday RevPAR increasing 10.1%. Top 25 weekend ADR fell 7.2% with RevPAR falling 12.0%. Top 25 ADR on the shoulder days (Sunday & Thursday) increased 2.3% resulting in a RevPAR gain of 0.5%.

Four Top 25 markets (New York City, Boston, San Francisco, and Seattle) reported weekday occupancy above 90%, which points to continuing recovery in groups/meetings and business travel.

• New York achieved 93.3% weekday occupancy, up 2.4ppts YoY with RevPAR up 15.2%, the second highest increase among the Top 25. Fashion Week’s conclusion along with numerous events throughout the city drove performance.
• A strong meetings calendar drove Boston weekday occupancy to 93.0%, up 4.8ppts YoY.
• The annual Dreamforce Salesforce conference drove San Francisco’s weekday occupancy to 92.2%, up 3.9ppts YoY. Weekday RevPAR increased 69.1%, the highest RevPAR increase among the Top 25.
• Seattle weekday occupancy (91.4%) was essentially flat to last year. RevPAR grew 3.9%. Beyonce’s Renaissance World Tour concert (14 September) contributed to the strong week.
• Las Vegas achieved 85.5% occupancy amidst a challenging week with the reported MGM cyberattack. Any potential effects were offset somewhat by PACK EXPO international, which brought 39,000 attendees to the city early in the week.

Across the remaining markets, weekday occupancy was notable in Salt Lake City/Ogden, UT (85.4%, flat YoY with RevPAR +2.7%) and San Jose/Santa Cruz (84.8%, +10.0ppts with RevPAR +6.6%). Weekends were especially strong in Gatlinburg/Pigeon Forge, TN, as the fall foliage season starts, and in Colorado Springs, which hosted the Pike’s Peak Marathon. Both markets saw weekend occupancy top 90%.

Luxury (75.9%) and Upper Upscale (80.2%) hotels saw their highest weekday occupancy of the year. Upscale hotels reported their second highest occupancy level of the year (80.2%). Weekday occupancy in the remaining chain scales ranged from 74.1% in Upper Midscale to 55.4% in Economy. Weekday ADR gains were greatest in Upper Upscale (+6.4%) and Upscale (+6.2%). Midscale and Economy chains saw weekday ADR increase by less than 2%. The largest weekday RevPAR gain was posted by Upper Upscale (+9.1%) with the measure falling in Economy hotels (-1.5%).

Group demand among Luxury and Upper Upscale hotels declined 4.5% compared to the same week last year impacted by the Rosh Hashana calendar shift, however, the metric increased 59% compared to last week, which is in line with expectations for growing group demand. Weekday group demand topped 2.1 million for only the third time this year.

Global Performance

Global occupancy (excluding the U.S.) grew 2.6ppts week-over-week to 70.9%, which was 5.7ppts higher than a year ago. ADR increased 10.8% to US$150, with RevPAR up 20.4% to US$106. Occupancy for the top 10 countries, based on supply, rose 2.9ppts week over week to 72.6% and 7.9% YoY. ADR was up 4.8% YoY to US$140, and RevPAR increased 17.6% YoY to US$101.

Of the top 10 countries, Asian countries saw the largest occupancy growth, while most European countries saw modest growth to negative percentage changes. In the Americas, Canada and Mexico both experienced declines. The United Kingdom (85.7%) maintained the highest occupancy level of the top 10 countries, up 2.3ppts YoY. Italy and France each saw occupancy declines for the second week in a row. China, Indonesia, and Japan saw the largest occupancy growth (+6ppts) with each posting strong RevPAR gains as well (+35% YoY).

Outside of the top 10, the highest occupancy gainers in each region:

• Kenya was up 25.9ppts with occupancy at 70.3%. Overall, occupancy across the Middle East and Africa was up 3.5ppts YoY.
• In the Americas, Nicaragua posted the greatest occupancy gain of 15.9%, resulting in occupancy of 47.7%. Curaçao saw the highest occupancy in the region of 75.7%.
• Sri Lanka led Asia Pacific for a fourth consecutive week with a gain of 27.5ppts YoY even though occupancy remained rather low (52.5%). Fiji and Singapore both saw over 80% occupancy at 84.3% and 82.0%, respectively. Fiji experienced the region’s highest occupancy for the second consecutive week.
• Denmark saw the highest occupancy gain in Europe for the second week in a row, up 18.3ppts to 75.6%. Ireland, however, had the highest occupancy (93.0%) in the region and across the world.

Final thoughts

This week provided a solid look into the fall season with strong weekday performance, particularly in the Top 25 Markets, along with group events strengthening. Major fall events such as football games and the growing popularity of big-name concerts and festivals will help bolster demand into the fall. All indications point toward a typical, dare we say, normal fall season.

Looking ahead

The next couple weeks are predicted to see solid weekday performance based on the strength of the past couple weeks and STR’s occupancy on the books. Like the Rosh Hashanah calendar shift, there will be another upcoming shift for Yom Kippur. This year it will be observed from 24-25 September. Last year, it occurred 4-5 October. This will create difficult and easy comps in the weeks to come. Halloween, which happens on a Tuesday this year compared to Monday last year, will also impact weekday performance. Overall, the outlook remains somewhat optimistic as we move towards the end of 2023.