STR Weekly Insights: 12–18 March 2023

Countries included: United States, Barbados, Bahamas, United Arab Emirates, United Kingdom, Spain, Japan, Jamaica, Puerto Rico, Guatemala, Germany, Mexico, China, Italy, Indonesia, Canada, France

U.S. Performance

Spring break travel propelled the U.S. hotel industry to stronger performance than projected. The week ending 18 March this year was the peak spring break period with the most students (both college and K-12 schools) out of session, according to STR's School Break Report.

Occupancy (67.6%) reached the highest level of the year. Revenue per available room (RevPAR) hit US$113 and extended the double-digit growth streak to 11 weeks, up +10.4% year over year (YoY). More recent growth is more noteworthy given that easy Omicron comps have faded from the calendar. Overall, RevPAR has increased by double digits in all but four of the past 65 weeks. However, this week’s gain was the lowest of the past 10 weeks, which aligns with expectations for more modest growth as the year plays out.

Average daily rate (ADR) grew 8.9% YoY to US$167, well ahead of annual rate of inflation. Weekly room demand exceeded 26.2 million, with over one million more rooms sold than the prior week. The demand level was the second highest ever recorded for this particular week, 1.2 million less than the matching week of 2019.

Contributing to the healthy performance was continuing improvement in the Top 25 Markets, specifically on weekdays (Monday-Wednesday). Top 25 occupancy for the full week reached 75.6%, which was the highest level since mid-October 2022. In the same week of 2019, Top 25 occupancy was 79.5%. The record for the week (81.3%) came in 2018. Markets holding back stronger occupancy for the group included San Francisco (67.5%), Minneapolis (53.8%), Philadelphia (59.4%), Seattle (64.8%) and Chicago (59.2%), as each was left with a more than a 16-percentage point (ppt) gap to 2019. While occupancy remained below the levels seen prior to the pandemic, other Top 25 measures continued to see solid growth:

• ADR (US$204) across the Top 25 Markets increased 15.4% YoY, resulting in RevPAR of US$154 (+20.7% YoY).
• Top 25 Market weekday occupancy (75.9%) increased 6.7ppts, with eight markets reporting occupancy above 80%, including Phoenix (92.7%), Tampa (87.1%) and New York City (86%).
• Weekday occupancy for central business districts (CBDs) reached 70.4%, up 8.5ppts YoY with double-digit gains seen in the Atlanta CBD, New York Financial District, Washington, D.C. CBD, and others.

Top 25 weekend occupancy, while higher than weekday at 80%, was down (1.7ppts) compared to the same week last year with only nine of the Top 25 markets posting year-over-year growth. As compared to a week ago, weekday group demand slowed in most Top 25 Markets given spring break. However, nearly all Top 25 markets saw year-over-year growth with strong gains in Atlanta, Boston, Las Vegas, New York, San Francisco, and Washington, D.C. Las Vegas and Orlando sold the greatest number of group rooms followed by Washington D.C.

Outside the Top 25 Markets, weekday occupancy was mostly stable relative to last year which, given the substantial gains seen in the prior two years, is not concerning. Something to watch is the softening of weekend occupancy which, until now, has been improving week over week.  

Market highlights

Nineteen of the 166 STR-defined U.S. markets reported occupancy above 80%, led by Phoenix (92.6%) and the Florida Keys (92.5%). Another 30 markets saw occupancy between 70% and 80%. Overall, 108 markets reported occupancy above 60%, the most of the past 21 weeks.

Eight Top 25 Markets achieved greater than 80% occupancy as compared to four markets the prior week.

• Las Vegas, Miami, Phoenix, and Tampa hit +80% occupancy two weeks in a row.
• New Orleans, New York, Oahu, and Orlando joined the group in the most recent week.

Double-digit RevPAR increases were seen in 11 markets—Boston, Chicago, Las Vegas, New Orleans, NYC, Oahu, Anaheim, Phoenix, San Francisco, Seattle, and Washington D.C.

St. Patrick’s Day did not have much impact on a national scale, however, there was a noticeable impact in a few markets (Savannah, Georgia, Boston and St. Paul).

Global Performance

Matching the strength seen in the U.S., global hotel occupancy (excluding the U.S.) increased 3.4 ppts from the previous week, reaching the highest level of the year at 67.5% and up over 15 ppts compared to the same week last year.

The United Arab Emirates held the top country occupancy position at 86.4%. Jamaica and Puerto Rico maintained their position in the +80% group and were joined by Guatemala, the Bahamas, and Barbados. Singapore just missed the cut with 79.3% occupancy.

Each of the 10 largest countries by hotel supply saw an increase in occupancy compared to the prior week. However, there was some shifting of positions as Indonesia barely overtook the U.K. for the top spot. Mexico and Spain changed positions for the third and fourth spots. The countries experiencing the greatest year-over-year gains were China, Germany, and Indonesia.

Final thoughts

The week was one of the best of the year across the entire globe. The return to “normalcy” highlighted over the past three weeks appears to be becoming a pattern. Improvements will start to narrow across the world as we move away from comparisons against the rocky start of early 2022. As we continue through the spring season, this past week’s performance gives us good reason to be optimistic about the weeks ahead.

Looking ahead

U.S. industry indicators are expected to remain strong across the remainder of the spring break season. For the week ending 25 March, we expect U.S. performance to see gains as March Madness and other springtime events take place. RevPAR growth could be a tad lower than what was seen this past week. Outside the U.S., the year-over-year comparables will remain strong given the later recovery period, and with China’s reopening, new demand will start to appear beyond China’s borders.