STR Weekly Insights: 14-20 January 2024

Analysis by Isaac Collazo, Chris Klauda, Will Anns

Countries (markets) mentioned: United States (Atlanta, Detroit, Dallas, Houston, Las Vegas, Nashville, New York, Seattle), China (Beijing), Japan, Indonesia, Germany, France, Mexico (Mexican Caribbean and Baja), Canada, United Arab Emirates (Dubai)

Highlights

• U.S. hotel performance slowed with the Martin Luther King Jr. holiday and severe winter weather.
• The Top 25 Markets outperformed the rest of the country.
• NFL Playoffs, primary elections, and other events led to double-digit RevPAR gains for a few markets.
• In Asia, Beijing posted dramatic year-over-year occupancy growth.

U.S. performance

U.S. hotel occupancy came in at 52.2%, down 1.1 percentage points (ppts) from the previous week. The dip was expected due to the MLK holiday. The year-over-year decline in the metric (-2.1ppts) was not anticipated but can be attributed, in part, to the severe winter weather that impacted most of the country during the week. Despite weaker occupancy, average daily rate (ADR) was up 1.6% YoY, but that gain was insufficient to lift revenue per available room (RevPAR), which dropped 2.2%.

ADR has grown in every week but two over the past two years and is expected to increase at or above the rate of inflation in every quarter of the year, something that did not happen in 2023. 

Performance was generally better in the Top 25 Markets as RevPAR was down 1% YoY versus 3.3% in the remaining markets. Occupancy drove the Top 25 with the measure falling 1.1ppts compared to 2.6ppts in all other markets. ADR growth, however, was weaker in the Top 25 (+0.8%) versus 1.8% in the rest of the country. The weaker ADR growth in the Top 25 was due to weaker growth in Las Vegas. Excluding Vegas, ADR growth matched the level of the remaining markets.

As seen previously, the size of the Las Vegas market can impact the entire industry. While this most recent week’s impact was not large enough to shift the total U.S. significantly, it was felt among the Top 25 Market metrics. Excluding Las Vegas, the Top 25 Markets showed stronger performance with almost flat occupancy YoY (-0.2ppts) and an ADR gain of 1.8% resulting in a RevPAR increase of 1.4%.

Following a robust week, buoyed by the Consumer Electronics Show (CES), Las Vegas saw performance retreat. The weaker footing is partly due to a calendar shift in the SHOT (Shooting, Hunting, Outdoor Trade) show, which is a week later this year. Also, Las Vegas has more supply in the market with the ramping up of its newest hotel, Fontainebleau, which opened in mid-December. These two factors among others led Las Vegas to see the largest RevPAR decrease among the Top 25 Markets, dropping 19.2% as both occupancy and ADR retreated (-9.9ppts and -6.8%, respectively).

Markets seeing double-digit RevPAR gains in the Top 25 Markets included Atlanta (+18.3%), propelled by a calendar shift of the Atlanta Market trade show. Detroit (+17.0%) and Dallas (14.1%) also saw solid gains with both hosting NFL playoff games. While the games certainly drove strong year-over-year growth, weekday results in both cities were also strong with RevPAR growing by more than 12% in each. Seattle (+9.9%), New York City (+7.4%), and Boston (+5.8%) also reported solid RevPAR gains. On the other end of the spectrum, Nashville saw RevPAR decrease 15.2%, the largest decline behind Las Vegas. The city came to halt after receiving its annual snow fall in a single day followed by single-digit temperatures that paralyzed the city and resulted in numerous airline cancellations.

Outside of the Top 25, Des Moines and New Hampshire markets, boosted by their respective primary elections saw double-digit RevPAR gains along with Portland, OR, Colorado Area, Syracuse and eight other markets. Portland was a market that saw higher performance due to winter weather in the Northwest.

Most other markets affected by the winter weather saw a negative impact, including Gatlinburg/Pigeon Forge, Arkansas Area, and Memphis.

Global performance

Outside of the U.S., China posted the highest RevPAR gain (+56%) of the 10 largest countries based on supply. Next on the growth list was Japan (+35%), Indonesia (+18%) and Germany (+14%). France and Mexico were the only two top 10 countries to report decreasing RevPAR (-0.8 and -6.1%, respectively). Mexico’s decrease was driven primarily by decreasing ADR, particularly in Mexican Caribbean and Baja California markets. While Canada saw RevPAR growth (1.3%) via ADR, occupancy was down 0.9ppts.

Dubai saw the highest occupancy at 82.9% (+0.2ppts), as the peak leisure season continues to keep pace with last year, assisted by events such as Ed Sheeran’s back-to-back concerts on Friday and Saturday night at the Sevens Stadium. ADR for the city was US$193, up +4.5% YoY.

Beijing saw by far the largest YoY occupancy gain at 46.0ppts to 78.9%. This is largely due to timing of the city reopening in 2023 from COVID restrictions, which will continue to affect comparisons for the next few weeks alongside the calendar shift of Chinese New Year. Comparing the same week to 2019, occupancy was down 2.9ppts. ADR across the city was up 3.9% to US$77. The upcoming Chinese New Year in February bodes well for continued strong performance.

Looking ahead

U.S. hotel performance is expected to steadily improve over the next several weeks as business and group travel return, reaching a seasonal peak in mid-March. An early Easter (31 March) will impact March and Q1 results.

Global markets will begin to stabilize following last year’s strong performance as the impact of COVID comparisons wanes. As in the U.S., holidays, sporting events, concerts, conferences/conventions, and the change of seasons will drive the ebb and flow of performance, and those changes should be more normal than what we have seen since March 2020.