U.S. Market Recovery Monitor - 11 September 2021

Previous MRM versions: 28 August | 4 September

Week ending 11 September

Occupancy for the week ending 11 September 2021 was 60.0%, somewhat better than expected and boosted upward by Labor Day Sunday. Weekday demand was again augmented by the ongoing recovery efforts in Louisiana and surrounding markets due to the lingering impact from Hurricane Ida, but to a lesser extent than in the previous week. As expected, demand slid downward earlier in the week due to the end of the holiday, Rosh Hashanah and limited business travel. The weekend, however, remained strong with occupancy at 70.6%, as more than half of all markets saw stronger demand this past weekend when compared with the corresponding weekend in 2019. On a total-room-inventory basis (TRI), which accounts for temporarily closed hotels, weekly occupancy was 57.6%.

Taking a final look at Labor Day, this year’s holiday had the highest demand in history. More than 12.1 million rooms were sold over the three-day weekend, surpassing the previous record set in 2018. Seventy-nine percent of hotels reported occupancy above 60% during the three-day weekend with 46% above 80% occupancy. We know, however, that Hurricane Ida boosted demand in the Gulf region. Taking out the 10 evacuation markets we identified in our previous week’s analysis, demand over the three-day holiday was still at a record high, but just barely with the percentage of hotels above 60% occupancy the same as in 2018 and the number above 80% just barely below. Sunday’s demand level was the best since the Sunday of Memorial Day. Demand on Monday was also the highest ever recorded for Labor Day. Granted, there is lots of noise in the data, especially over the Labor Day period, which has a history of hurricane impacts, but demand levels in many destinations saw solid gains and seemed to fit with what we saw this summer in terms of the desire to travel for leisure post lockdowns.

Overall, weekly demand fell by nearly 500,000 room nights to 23.2 million. As compared with 2019, demand was 88% of 2019’s level, which is the lowest of the past 14 weeks. Unlike this year, Jewish observances in 2019 were at the end of the September and beginning of October. That means that this week in 2019 was a strong business and group week, hence a hard comparison. Most markets reported declines in demand, but there were some notable exceptions, including New Orleans, Denver, and New York City. New Orleans saw the largest weekly demand gain with progressive growth each day. Weekly demand in New York City surpassed 500,000 room nights for only the second time since the start of the pandemic, and TRI occupancy reached 54%⁠—the highest of the past 18 months. The finals of the U.S. Open Tennis Championship and Broadway’s reopening helped push weekend TRI occupancy to 62%, which was actually down from 64% during the Labor Day weekend.

On a property-level, 55% of hotels reported occupancy above 60% for the week, which is the lowest percentage since mid-May. In fact, the distribution of hotels by occupancy looked similar to what was seen ahead of summer. Weekend distribution however was much stronger with 74% of reporting hotels showing occupancy above 60% as 25% reported occupancy above 90%. The NFL, college football and eventually fall breaks should keep the weekends busy.

After rising in the previous week, ADR dropped 1.6% week over week with the 2019 index falling by 5.4 points to 99, which was the first time below 100 since the end of June. Real (inflation-adjusted) ADR indexed at 93. Despite the large decrease, 48% of markets had real weekly ADR above what it was in 2019.

TRI RevPAR declined 4.0% during the week, resulting in a 10-point decrease to 83 in the 2019 index but remaining in STR’s “recovery” category. Seventy percent of all markets were at “peak” (TRI RevPAR indexed to 2019 above 100) or in “recovery.” TRI RevPAR has been in the “recovery” zone for the past 14 weeks. The index on a 28-day moving total was 93 with 90% of all markets in “recovery” or “peak.” The Florida Keys and Daytona Beach led all markets and occupied the top two spots whereas San Francisco and San Jose remained at the bottom.

Outside the U.S.
Occupancy outside the U.S. improved to 41%, up nearly two points week over week. China’s occupancy jumped 7 points to 44%. Nearly all the 10 largest non-U.S. countries (based on supply) saw growth in the week. The notable exception was Canada, where occupancy fell 7pts this week to 52%, which was the country’s lowest levelin eight weeks. After dropping in the previous week, U.K. occupancy advanced to 66%, slightly below the pandemic high seen three weeks ago. While occupancy increased, the percentage of non-U.S. markets in “recovery” or “peak” fell from 35% in the previous week to 33% on a 28-day moving total basis.

Big picture
We believe the demand levels seen during the Labor Day holiday along with this week’s weekend levels reaffirm the continued strength of leisure travel despite the increase in COVID-19 cases. However, we are increasingly concerned with fall business/group travel given the increase in conference cancellations and postponements. We expect weekends will be good but weekdays, especially in the Top 25, will likely suffer for a bit more.

About the MRM
When the U.S. hotel industry reached the one-year anniversary of the earliest COVID-19 impact, year-over-year percentage changes became less actionable when analyzing performance recovery. Thus, STR introduced a weekly Market Recovery Monitor that categorizes each STR-defined market based on an indexed comparison with the same time periods in 2019. An index is simply a ratio that divides current performance by the benchmark (2019 data).

For example, during the week ending 6 March 2021, U.S. RevPAR was $48.13. In the comparable week from 2019, RevPAR was $87.75. This produces an index of 54.8 ($48.13/$87.75*100), meaning RevPAR was slightly more than half of what it was in 2019.

We use an index to place each market in one of four categories: depression (index <50), recession (index between 50 and 79.9), recovery (index between 80 and 99.9), and peak (index >=100). Additionally, we highlight other top market performances that contribute to higher levels of recovery across the U.S.