STR Weekly Insights: 7-13 January 2024

Analysis by Isaac Collazo, Chris Klauda, Will Anns

Countries (markets) mentioned: United States (Las Vegas, Houston, Anaheim, Detroit, San Francisco, New York City), China, Japan, Indonesia, and Spain (Madrid, Barcelona).

Highlights

• U.S. hotel performance received a boost from Las Vegas due the shift of the CES trade show.
• Midweek (Monday-Wednesday) travel in the Top 25 Markets drove this week’s overall performance.
• The U.S. Travel Association this week called out Spain as one of the most popular international markets. Hotel performance in markets across Spain reflected this popularity for 2023 and into 2024.

U.S. performance

Early January is generally a slow period for the hotel industry. Thus, this week’s robust gain (+6.3%) in average daily rate (ADR) came as a surprise given occupancy was down 1.5 percentage points (ppts). A closer look revealed that most of the growth was due to a single market—Las Vegas, which hosted the annual Consumer Electronics Show (CES) a week later than in 2023. U.S. revenue per available room (RevPAR) advanced 3.3% due to the ADR boost.

Las Vegas accounts for 3.1% of all U.S. room supply, so significant events, especially during slow periods, can and do impact entire industry results. This week due to the calendar shift of CES, Las Vegas RevPAR was up 129%. Las Vegas also posted the nation’s highest occupancy (79.8%).

Excluding Las Vegas, U.S. RevPAR was down 1.8% because of a 2.2ppt decrease in occupancy that was not offset by the 2.3% ADR increase.

Weekday (Monday-Wednesday) performance in the Top 25 Markets was also good as RevPAR increased 18.3%, driven by ADR (+14.4%) with occupancy up 2.1ppts. The Top 25 result was also impacted by Las Vegas. Excluding Las Vegas, Top 25 weekday RevPAR was essentially flat (+0.3%) on falling occupancy (-0.8ppts) and rising ADR (+1.7%).

Outside the Top 25 Markets, weekday RevPAR fell 2.7%, also due to lower occupancy as ADR rose 2.1%.

Market highlights:

• Houston, hosting the College Football National Championship on Monday, 8 January, saw RevPAR rise 38.9% with gameday RevPAR increasing 151.2%.
• Anaheim RevPAR increased 23.6%, lifted by the Disneyland Half Marathon weekend.
• NFL playoff action in Detroit pushed RevPAR 7.6%. Detroit also benefitted from strong group business.
• San Francisco was notable for its ADR of $552, the highest in the country and double what was seen in Las Vegas. J.P. Morgan’s Annual Healthcare conference drove the results with ADR up just slightly (+0.7%) to what was reported a year ago.
• New York City RevPAR was up 6.2%, a result of occupancy (+1.0 ppts) and ADR (+4.6%) gains.
• Florida and Hawaii led the nation in occupancy with most of the markets above 70%.

U.S. hotel class RevPAR changes went from positive to negative with Luxury class hotels gaining 15.4% YoY to the Economy class declining 4.8%. ADR across all classes was positive with a high of +1.8% YoY for Luxury to a low of +0.5% for Economy. Year over year, occupancy decreased in class order for all but Luxury.

Global performance

The top 10 countries, based on total supply, and excluding the U.S., saw occupancy increase 2.5ppts to 57.2%, largely supported by China (+7.2ppts to 56.0%), which was one of only three top 10 countries to see an increase.

ADR was up 5.9% to US$106. Japan and Indonesia continued to see gains, +44% and 16.7%, respectively. Overall, top 10 RevPAR increased 10.8% to US$61, continuing the trend of double-digit growth.  

Highlighting Spain

Spain, recently highlighted in a U.S. Travel report, continued to benefit from a rise in popularity for international travel. Record ADR was seen in popular leisure destinations, especially in the Balearics (Mallorca, Menorca, and Ibiza). In the peak summer months, ADR reached US$265, up 3.4%. More recently the national holiday of Epiphany/Three Kings Day attracted tourists with amazing night parades across the streets of Spain. In Madrid, ADR climbed 5.2% to US$154, while in Barcelona, the measure grew 13.9% to US$139. In the most recent week, occupancy across Spain continued to track upwards, increasing 2.8ppts ahead of last year.

Looking ahead

The year started out a little stronger than expected in the U.S. due to the CES calendar shift but fell in line with our forecast, which calls for ADR to drive RevPAR in 2024. An updated U.S. forecast will be released the week of 22 January at the American Lodging Investment Summit (ALIS). STR’s Forward STAR data also continues to point to growth with occupancy on the books exceeding 2023 levels through April.