Analysis by Chris Klauda, Will Anns, Isaac Collazo
Countries included: United States, United Kingdom, Spain, Germany, Italy, China, Mexico, France, Canada, Japan, Indonesia, Ireland, Malta, and Greece.
U.S. hotel industry performance declined, which is typical for the week that contains the Memorial Day holiday. Occupancy (61.6%) was down 1.5 percentage points (ppts) year over year (YoY) and 5.1ppts week over week (WoW).
The weekly ADR of US$150 was down 4.2% WoW but up 1.3% YoY. RevPAR declined 1.0% YoY to US$93, driven by the decline in occupancy. Looking at the past four weeks, ADR and RevPAR remain positive compared to last year, up 2.8% and 1.4%, respectively, but below the rate of inflation (~5%).
Occupancy in the Top 25 Markets (65.6%) fared better than the rest of the country, declining only 0.4ppts YoY compared to a 2ppt decline outside the Top 25. Occupancy for the rest of the country was 59.4%.Top 25 ADR increased 1.8% YoY to US$174, while all other markets experienced a slightly smaller increase (+0.7%) to US$136.
Weekday (Tuesday/Wednesday) occupancy for the Top 25 Markets continued to show signs of recovery, increasing a significant 0.6ppts YoY, which is notable for a week when occupancy overall declined and was preceded by a holiday. Markets outside the Top 25 saw a sharp fall, (-1.7ppts YoY).
Seven markets in the Top 25 achieved RevPAR increases above 6% YoY, led by Boston (+18.6%), Washington, D.C. (+15.2%) and Las Vegas (+14.7%). Other market highlights include:
To recap the Memorial Day holiday weekend, occupancy for the three days (Friday, Saturday & Sunday) reached 72.1%, the fourth highest since reporting began in 2000 and just slightly below the 20-year average (72.6%). However, that level was well below the average seen between 2013 and 2019 (75.6%). The highest occupancy ever recorded for the three-day holiday was 77.1% in 2016.
Global hotel occupancy (excl U.S) for the week was 65.5%, down 4.8ppts WoW due to the Spring Bank holiday in the U.K. and Europe. However, occupancy was 6.1ppts ahead of last year. Weekly ADR grew 12.7% to US$147 with RevPAR of US$96 up 24.2%.
For the top 10 countries by supply, RevPAR was US$93 (+22.2% YoY), driven again by occupancy (+7.3ppts) along with robust ADR (+8.9%). Occupancy continues to be propelled in a large part by Asian markets, where China and Indonesia recently saw YoY increases in occupancy of 15.4 ppts and 13.4 ppts, respectively. Overall, occupancy in the top 10 attained 66.6%, down from 72.4% a week ago due to the Spring Bank holiday.
The U.K. had the highest occupancy of the top 10 countries at 81.2%, 5.3ppts higher than the next country Italy (75.9%). ADR for the top 10 was up 8.9% to US$139. For Germany, the difference in occupancy this year (62.8%) vs. last year (71.3%) can be attributed to a calendar shift of the Whit Monday public holiday, which this year was on 29 May, and in 2022, on 6 June 6.
Outside of the top 10 countries, three countries posted an occupancy higher than the U.K.—Ireland at 86.1% (continuing to be the world’s highest), Malta at 83.1% and Greece at 82.5%.
This week reflects a turning point to the next chapter in global hotel performance. U.S. and global results are pointing to more normal patterns. Events will continue to drive market-level performance and all indications are for leisure travel to remain strong. Group demand should show a small burst in June and then slow until fall. Business/corporate demand continues to improve with gains in weekday occupancy. ADR remains positive, although the rate of ADR and RevPAR growth continues to moderate as forecasted.
Next week should produce a significant improvement in RevPAR growth across the globe as summer gets into full swing in the Northern Hemisphere and June groups return. Data from Forward STAR shows continued year-over-year growth for the top U.S. markets during the next 90 days). These markets will also drive most of the performance measures, based on the recently updated STR forecast for the remainder of the year.