STR Weekly Insights: 16-22 July 2023

Countries included: United States, United Kingdom, China, Japan, France, Spain, Singapore, Malta and Ireland

Analysis by Isaac Collazo and William Anns

U.S. Performance

U.S. weekly occupancy (72.9%) was at its highest level since the week ending 10 August 2019, up 0.4 percentage points (ppts) versus a year ago. While affirming the resiliency of leisure travel, the level still pales with what was seen in the comparable week of 2019 (77.6%). More importantly, this week’s result is likely the highest of the year, meaning that occupancy on an absolute basis will begin a seasonal downturn as summer comes to an end. Year-over-year growth, however, is still expected. Among the other key measures, average daily rate (ADR) increased 1.5% year over year (YoY) with revenue per available room (RevPAR) growing 2.0%. For the month so far, RevPAR is up 2.2% YoY, mostly on ADR (+1.8%).

New York City led the nation in occupancy (90.9%) with its highest level since mid-December 2019. As compared to the same week in 2019, New York’s occupancy was less than a point off (-0.8ppts). Of course, the market is different now versus then as available rooms are 7.1% lower due to permanent and temporary (immigrant housing) closings.

More than 60% of the 167 STR-defined markets posted occupancy above 70%, the most in a year. Eight markets, including Boston (88.2%), Indianapolis (78.5%), Orange County/Anaheim (86.8%), and Seattle (88.7%) reported their highest occupancy since the end of summer 2019. While occupancy reached a 206-week high, 47% of markets saw a drop in the measure with the largest declines seen in markets that had higher occupancy last year than in the same week of 2019, including Augusta, GA (-16ppts), Hawaii/Kauai (-10.8ppts), Grand Rapids & Michigan/West (-10.7ppts), and Orlando (-6.2ppts).

The Top 25 Markets were largely responsible for the week’s gain in occupancy where it grew 1.5ppts YoY to 76.5% versus a decrease of 0.2ppts in the remaining markets. Like other comparisons this week, Top 25 occupancy was at its highest level since late 2019 and has been above 70% in 10 of the past 12 weeks. The Top 25 also accounted for nearly all of the week’s ADR growth.

Weekday (Monday-Wednesday) occupancy reached 73.1%, which was also the highest level since late summer 2019, leading the week’s total occupancy gain. Additionally, weekday occupancy was up nearly one percentage point versus last year. In the Top 25 Markets, weekday occupancy reached 76.2%, up 1.8ppts YoY. The measure was also up in the remaining markets (+0.6ppts). Shoulder nights (Sunday & Thursday) also saw a slight gain (+0.2ppts YoY) versus a decrease on the weekend (-0.5ppts), which has seen declines in most weeks of this year. Non-Top 25 Markets were responsible for the decrease in weekend occupancy as the measure dropped there by 1.1ppts YoY, whereas it was up in the Top 25 (+0.8ppts).

Weekday ADR largely drove the week’s total growth, up 2.5% YoY across the U.S. Within the Top 25 Markets, weekday ADR increased 3.2% YoY as compared to 1.9% for all remaining markets. Shoulder nights also saw better growth in the Top 25 (2.3%) versus 0.6% outside the Top 25. Overall, total U.S. ADR was slightly below the rate of inflation.

Upper Upscale chains saw the largest occupancy gain in the week, up 3ppts YoY to 77.4% with the highest occupancy in Upscale properties (79.5%, +1.9ppts). Occupancy was also strong in Upper Midscale (77.2%, +0.7ppts). All three of those chain scales posted their highest weekly occupancy since the start of 2020. Economy chains, however, continued to see declines as it has for most of the year, falling 2.2ppts YoY to 62.3%, which was actually the segment’s highest level of the year.

Global Performance 

Weekly global occupancy (excluding the U.S.) reached a post-pandemic high (72.5%) for the seventh time this year, narrowly clipping the previous peak recorded in the prior week (+0.1ppts WoW). The measure was up 5.4ppts YoY. ADR continued to grow strongly, up 11.6% YoY with RevPAR improving 20.5% YoY to US$113, which was the fourth highest result since March 2020.  

Occupancy for the top 10 countries (based on supply) reached its second highest result (74.9%) since the start of the pandemic, up 6.7ppts YoY. Top 10 ADR increased 5.6% YoY with RevPAR up 16% YoY. 

• As it has for the past 10 weeks, the U.K. continued to lead the top 10 countries with occupancy of 83.3%, up 0.7ppts YoY.
• Spain took the second spot within the top 10 as occupancy climbed 2.1ppts YoY to 78.6% with ADR up 2.8%. The step up in ADR coincides with the school period ending in Europe. ADR has been above US$180 for the past four weeks.
• China and Japan continued to show the highest occupancy growth, Japan up 13.7ppts YoY and China up 11.2 ppts, with occupancies for the week 75.7% and 71.6%, respectively. China’s occupancy was at its highest level since the week ending 24 August 2019.
• France was the only country in the top 10 to post declining occupancy, down 4.1ppts YoY to 74.3%. 

Outside of the top 10, Singapore posted the highest occupancy growth, up 13.5ppts YoY, resulting in the third highest global occupancy (85.7%) of the week. Malta and Ireland continued to compete for the world’s highest occupancy with Malta taking it this week by a mere 0.02ppts and occupancy of 86.9%. This was also the best week since March 2020 for non-top 10 countries in weekday occupancy, which reached 69.3%.

Final thoughts

While slower than a year ago, U.S. demand has advanced, especially in the Top 25 Markets and on the weekdays. At its current pace, July RevPAR is poised to see a growth rate like June. With summer’s end on the horizon, business/group travel will have to advance a bit more to continue the industry’s recovery. Outside the U.S., growth is strong on easier comparisons, which will linger through most of the year.

Looking ahead

The absolute level of U.S. occupancy is expected to begin trending down in the week ending 29 July 2023, hitting a summer seasonal low in the week containing Labor Day. Then we expect a gradual rise but to a level lower than what we have seen over the summer. Global occupancy likely will peak soon and then also trend down.