U.S. hotel occupancy keeps pace with peak summer 2021 levels as urban markets rebound

Signs of summer are here for the U.S. hospitality industry, and some of the nation’s major urban markets are showing steady signs of recovery.

Increased group and business travel, graduations and high leisure travel led to strong hotel performance during the week of May 15-21, and the industry is gaining momentum for summer months of high demand for leisure.

US occupancy reached 68.6% for the week, which was the highest level since July 2021. To add some perspective, since the start of the pandemic, weekly occupancy has only exceeded 65% only 17 times, seven of which occurred this year. and the rest seen last summer. In addition, the occupancy rate since the beginning of the year is 60% compared to 51% a year ago. The weekly average daily rate rose to $152, the third highest level in the pandemic era and 13% higher than the comparable week of 2019. More importantly, revenue per available room reached $105, its highest level since the start of the pandemic.

Source: STR
Source: STR

For the second week in a row, New York City led the nation in occupancy at 89.4%, propelled by graduation ceremonies for Columbia University and New York University classes of 2020, 2021, and 2022. It was also the highest occupancy in the city in the pandemic era. A total of 18 markets reported their highest occupancy levels since the start of the pandemic, including San Francisco at 79%, Boston at 77.3%, Seattle at 76.2%, Washington, DC at 76, 1%, Chicago at 71.5%, Philadelphia at 69.8%, and Minneapolis at 63.9%.

Seventy percent of reporting hotels saw occupancy exceed 60% during the week, the highest since last summer. Of the 600 large hotels – with more than 300 rooms – in urban areas, 80% had a weekly occupancy above 60%. Of these hotels, 42% reported an occupancy rate above 80%, which was the highest since the start of the pandemic.

Weekday attendance from Monday to Wednesday, which is a barometer of business travel, increased to 67.2%; it was the highest for the year and the fourth highest since the start of the pandemic. Among the top 25 markets, weekday occupancy was 72.2% – the best since March 2020 – with group demand second highest. The top 25 markets also recorded their highest pandemic-era weekday ADR and RevPAR at $184 and $133, respectively. Eight of the top 25 markets, including New York, Chicago, San Francisco and Washington, D.C., also reported their highest pandemic-era weekday occupancy, led by NYC, at 91.1%, and San Francisco, at 82.7%. Fourteen of the top 25 markets saw weekday occupancy exceed 70%, the most since the start of the pandemic. Nearly half of large city hotels reported weekday occupancy above 80%, which was again the highest in the pandemic era.

Source: STRSource: STR
Source: STR

Strong occupancy also prevailed in the central business districts, where weekly occupancy exceeded 73%, the highest level in 27 months. Along with strong occupancy, ADR, at $244, and RevPAR, at $180, also reached pandemic highs. Five of the 20 Central Business Districts recorded over 80% occupancy, led by New York’s Financial District at 92%, which we include along with the other 19 Central Business District submarkets. Central Business District occupancy on weekdays was the same as the weekly total, with New York’s Financial District hitting 94%, the highest level in the submarket since late 2019. chain-wide businesses, luxury (72.2%), upscale (72.3%) and upscale (74.6%) hotels recorded their highest occupancy rates since the start of the pandemic.

Source: STRSource: STR
Source: STR

Group demand strengthened among luxury and upscale hotels, and this week group demand was the second-best in the pandemic era. This was the fourth week of high group demand with a weekly total at 97% of the comparable week of 2019. Weekday group demand was 86% of the 2019 level, weekend group demand exceeding 2019 by 22%. The group’s RevPAR also topped 2019 for the second time, but this past week’s level was more significant given its high volume. When group demand previously exceeded 2019, volume was low and based on holiday groups.

Weekend occupancy was 77.8%, which was the second best of the year and the 12th highest of the pandemic era. Again, New York leads the nation with the highest weekend occupancy at 91.2%, followed by Long Island. Although occupancy was not a record high, weekend RevPAR hit $131, which was a pandemic-era high as ADR was second best.

Leading indicators point to another strong week ahead of the US Memorial Day holiday. TSA security checks for the seven days ending Thursday, May 26 were at 93% of pre-pandemic comparable, which is the highest seven-day percentage in the pandemic era. As was said at the Hunter Hotel Investment Conference throughout March, this summer is about to be “the summer of summers”.

Pricing and inflation

The nominal average daily rate remained high with this week’s result 13% higher than the comparable level in 2019 and the third highest in the pandemic era. Week-over-week hotel room prices rose 2.2%, the largest increase in six weeks. The top 25 markets recorded their highest ADR at the time at $184, as did the central business districts at $244 as well as upscale ($159) and upscale ($131) hotels.

Inflation has increased by around 13% this year compared to the same period in 2019. Forty-five percent of hotels that opened in 2019 and are still open today saw ADR growth above the rate of inflation, with 28% recording ADR growth. by more than 20% from 2019. However, there are still some hotels that are suffering. Twenty-five percent saw a decline in ADR compared to the same week in 2019. On an inflation-adjusted basis, real industry-wide ADR was essentially at 2019 levels and stayed at or above 2019 for the past 10 weeks.

Source: STRSource: STR
Source: STR

Nominal revenue per available room was the highest since the start of the pandemic in almost all data cuts. It is therefore not surprising that 79% of the 166 markets defined by the STR are in the “peak” category – with a RevPAR indexed to 2019 above 100 – with the remaining markets, except one, being in “recovery” or RevPAR indexed to 2019. between 80 and 100. On an inflation-adjusted basis, 41% of the markets were in “peak” and 53% in “recovery”. Taking a longer term view with rolling 28 day data, 37% of the markets had actual RevPAR at the “peak” with an additional 53% in “recovery”.

Isaac Collazo is vice president of analytics at STR.

This article represents an interpretation of data collected by CoStar’s hotel analytics company, STR. Feel free to contact an editor with any questions or concerns. For more analysis of STR data, visit the Data Insights blog at STR.com.

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