STR Weekly Insights: 25-31 August 2024

Analysis by Isaac Collazo, Chris Klauda

Countries/markets mentioned: 

• United States: Atlanta, Chicago, Columbus, Des Moines, Houston, Milwaukee, New Orleans, Seattle 
• Global: China, Indonesia, Mexico, Spain

Highlights

• U.S. RevPAR up for seventh consecutive week
• All chain scales posted RevPAR gains over the recent four-week period
• Healthy group demand continues
• Global growth continues with an unexpected boost from occupancy

Lucky 7!

In the week ending 31 August 2024, U.S. revenue per available room (RevPAR) increased for the seventh consecutive week, boosted by both average daily rate (ADR) and occupancy. Group demand in luxury and upscale hotels rose for the seventh straight week as well. All seven days of the week produce positive RevPAR comparisons with weekdays (Monday – Thursday) leading the industry. All chain scales, except Economy, saw RevPAR growth led by weekdays. The weekend (Friday and Saturday) produced a modest RevPAR gain for a second consecutive week following four weeks of declines. The strong weekday performance bodes well for the coming months as the industry heads into the peak business travel season. 

Slower Labor Day weekend growth

U.S. weekly RevPAR rose 3.6% with occupancy growth (+1.9%) even stronger than ADR (+1.6%). RevPAR was lifted nearly equally from both the Top 25 Markets (+3.8%) and all other markets (+3.4%). Weekdays showed the largest RevPAR increase (+5.8%) with Wednesday earning the top spot, up 6.4%, as ADR rose 2.7% and occupancy grew 2.3 percentage points (ppts). 

Friday and Saturday of Labor Day weekend RevPAR was considerably slower (+0.9%) as occupancy was flat and ADR barely moved. Comparing the week and the holiday weekend to 2019, which aligns perfectly on a calendar basis, year-over-year growth in all metrics were higher but actual occupancy continued to be at a deficit (-2.6ppts week, -3.6ppts weekday, -2.4ppts weekend). Real (inflation-adjusted) ADR was also below 2019 for the week (-2.5%) with both shoulder days (Sunday & Thursday) and weekdays down. The latter was at a 7.3% deficit to 2019. However, weekend ADR was 4% higher than in the benchmark year.

RevPAR gains for all chains scale except Economy

Occupancy drove RevPAR growth across the top four chains scales (Luxury, Upper Upscale, Upscale & Upper Midscale) with RevPAR  gains ranging from +2.5% in Upper Midscale to +5.4% in Upper Upscale. Luxury and Upper Upscale each saw occupancy advance by over 5%. Midscale hotels benefitted exclusively from ADR gains while Economy hotel RevPAR fell as both occupancy and ADR decreased. The former fell more than the latter. Demand for Economy hotels was down 2.5%, which was the largest decrease in some time. We’re not reading too much into that larger decrease as Economy demand declines have been lessening since early this year. In the six weeks ending 31 August, Economy demand on a 28-day moving average was down 1% versus 1.2% in the prior six weeks. Total industry demand on the same basis is also trending better.

Chicago hotels hold the top RevPAR growth spot again

Following a significant lift from the Democratic National Convention, Chicago again had the highest RevPAR growth of any Top 25 Market, up 23.8% with all days of the week producing double-digit gains. Atlanta, Houston, Seattle, and Tampa all saw RevPAR gains of more than 10% during the week with the latter three posting growth of more than 20%. Outside of the Top 25 Markets, Des Moines, Columbus and Milwaukee saw RevPAR advance by more than 30%. 

Unstoppable group performance for the 7^th week in a row

While the base tends to be small this time of year, group demand in Luxury and Upscale hotels advanced by 8.5%, which was the seventh consecutive weekly gain. Much of the growth was the result of activity outside the Top 25 Markets, where group occupancy increased 2ppts while in the Top 25 Markets, group occupancy increased 0.3 ppts. Overall group ADR was flat (-0.1%), softened by non-Top 25 markets (-2.3%) while the measure increased in the Top 25 Markets (+2%). As seen over the past five weeks, weekdays continued to drive group demand, up 12.8%. Demand on shoulder days was also strong, up 9.4% while weekend gains were modest (+0.8%). ADR increased slightly across all days.

Transient performance across Luxury and Upper Upscale hotels was up for a second consecutive week with demand increasing 5.3% while ADR was flat (+0.1%). Transient demand increased across all days with ADR growing the most on shoulder days (+1.3%) followed by weekdays (+0.4%) and the weekend (-0.4%).

Global growth continues with an unexpected boost from occupancy, the greatest since April

Global performance improved for a 13th consecutive week as RevPAR grew 9.2%. The uplift was largely driven by ADR, which rose 4.5% along with occupancy, which showed the strongest gain since April (+2.9 ppts). ADR dominated RevPAR growth across the three largest countries based on hotel supply. Indonesia took top honors again with RevPAR up 21.6%. It has been in the top three of the largest countries in every week since May. Mexico grew RevPAR (+19.6%) entirely on ADR (+23.4%), while occupancy declined (-3ppts). Spain rounded out the list of stronger RevPAR gainers with the measure advancing 11.9% on ADR (+10.5%). 

For the first time since June, RevPAR in China grew, up 8.5% on occupancy (+6.9ppts). Nearly all markets were up with strong gains in Guizhou (+53.4%) and Macau (+41%). The largest markets in the country also saw strong growth with Guangdong up 38.2%. RevPAR grew by 5% or more in the other large markets. 

Looking ahead

August performance across U.S. hotels was a welcome improvement after a lackluster July, but keep in mind that this August had an extra weekend which lifted the entire month. The good news is that we are seeing an improvement in demand based on the 28-day moving average. The week containing the Labor Day holiday will show much lower performance due to the holiday, but September should perform well as group calendars adjust to the movement of the Jewish observances, which fall in October this year. Additionally, YoY comparisons will be easier due to their movement, but October will suffer as a result. Halloween falls on a Thursday this year, disrupting travel but less so than last year, when it fell on a Tuesday. The U.S. election is the following week, which will also slow travel.

Global performance is expected to remain healthy while slowing as summer comes to an end. Many eyes will be on China to see if this week’s positive performance is an indication of things to come.