• U.S. Market Recovery Monitor - 30 July 2022   

Excerpt from STR

With the annual U.S.  travel peak behind us, hotel demand and occupancy began to trend down - which is normal. For the week ending 30 July 2022 (week 31), however, the decrease in demand was much lower than in 2017, 2018 and 2019. In those years, demand fell by more than one million room nights week over week (WoW). This week, demand fell by only 316,000 room nights WoW, resulting in U.S. occupancy of 71.9%. That level was the fourth highest since the start of the pandemic and down just 0.8 percentage points from the week prior when the industry posted its highest occupancy since March 2020. Nominal average daily rate (ADR) was also down 0.5% WoW to US$158, which was 18% higher than in the comparable week of 2019 and 10.2% above a year ago. Nominal revenue per available room (RevPAR) decreased 1.6% WoW to US$114, but the index to 2019 increased for a third consecutive week with a level 14% higher than 2019 and 13% greater than a year ago. Real (inflation-adjusted) ADR was 3% higher than in 2019 whereas real RevPAR was one percent lower.

The week’s demand was strong. Comparing against other week 31s over the past 22 years, this year’s result was the third highest ever recorded behind 2019 and 2018, with the difference between 2022 and 2019 just 326,000 room nights. As compared with all weeks since 2000, the week ranked in the top quintile (22nd of the past 1,175 weeks). While not as high as initially expected, summer demand (weeks 23-31) has been strong, ranking as the fourth highest ever since 2000 behind 2019, 2018 and 2017 in that order. Summer occupancy thus far is 69.5%, as compared with 74% in 2019. A year ago, occupancy for the period was 68%.

The decrease in weekly demand was almost evenly divided between weekdays (Monday-Wednesday) and the weekend (Friday & Saturday), as together those two dayparts accounted for 85% of the total weekly demand loss. Markets outside the Top 25, however, made up all the weekend loss as the Top 25 saw a week-on-week gain during those two days. Occupancy in the Top 25 Markets reached 74%, down from 75% a week prior, with all other markets seeing occupancy of 71%, which was also one percentage point lower week over week. Top 25 weekday occupancy remained at or above 74% for a third consecutive week—it has been above 72% in seven of the past eight weeks. Weekend occupancy in the Top 25 Markets remained above 80% for a second straight week.

Top 25 Market occupancy ranged from 87% in San Diego to 58% in Phoenix. Two other markets (Houston and New Orleans) joined Phoenix with weekly occupancy below 60%. While its occupancy was low, room demand in Phoenix was 2% higher than in the comparable week of 2019. The other two markets mentioned saw room demand below 2019, but not by a significant amount (Houston -2% and New Orleans -5%). Ten of the Top 25 Markets, including Atlanta, Boston, Dallas, Miami, Nashville, and Orlando, saw this week’s demand surpass the level seen in the comparable week of 2019. Demand in Nashville was 22% higher. Five markets saw demand 10% lower than in 2019, including New York, San Francisco, Philadelphia, and Washington, DC. Demand in New York fell for a second consecutive week with the decrease coming on the weekdays as weekend demand was stable. Occupancy in Boston (86%) and Chicago (80%) reached pandemic-era highs with the latter boosted by the annual 4-day Lollapalooza music festival. Group demand, a stable for most Top 25 Markets, dropped slightly in the week with most of the decline coming on weekdays.

Upscale and upper midscale demand remained strong with both chain scales reporting their highest week 31 demand of the past 22 years. As compared to all weeks since 2000, demand for those two chain scales was among the top 10 all-time. Luxury and upper upscale continued to strengthen as compared with 2021 but remained below 2019 levels (~-8%). Midscale and economy have weakened since the start of the year. A year ago, midscale and economy were at or above 2019 demand levels, but this past week, both were below those levels. The downward shift in performance began in mid-March. Midscale has seen several weeks above 2019 since then, but economy has been mostly below the 2019 benchmark.

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