September 28, 2022

U.S. Hotel Occupancy Remained Soft, Staying Basically Flat

For a 3rd consecutive week, U.S. hotel occupancy remained soft with tenancy for 16-22 January staying generally flat (-0.1 percentage point) at 48.7%.

NB: This is a post from STR

Space need declined by 13,000 nights week on week but remained above 18 million and increased on a relative basis versus 2019 with the index at 87.2, up 0.5 points week on week. Typical daily rate (ADR) increased for a 2nd week however by only 0.2% with the index to 2019 rising to 98.6. Revenue per readily available space (RevPAR) likewise moved slightly upwards (+0.1%) with the index to 2019 (82.9) the greatest of the previous three weeks.

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Optimism for a strong 2022 was heard on and off phase at this weeks American Lodging Investment Summit (ALIS) in Los Angeles. While this weeks data continued to reveal weak point, better days are ahead as Omicron decreases and leisure travels returns.

For a 2nd consecutive week, 73% of the 166 STR-defined markets were classified as remaining in “Recovery” (RevPAR indexed to 2019 in between 80 and 100) or “Peak” (RevPAR indexed to 2019 above 100). On an inflation-adjusted basis, 64% of markets were in either one of those 2 classifications. The Florida Keys had the highest weekly index (162) whereas San Francisco had the most affordable (33 ). San Francisco and San Jose were the only two markets in the “Depression” classification (RevPAR indexed to 2019 listed below 50). On a 28-day moving total basis, 55% of markets were at “Peak” RevPAR, the least of the past 16 weeks, and 33% were in “Recovery.” Considering inflation, 43% of markets were at “Peak” RevPAR over the previous 28 days with another 37% in “Recovery.

Beyond the U.S.

Weekday ADR increased by 3.5% week on week with more than half of the growth coming from MLK Sunday. Weekend ADR fell by 5% after an 8% gain during the MLK weekend. Despite the drop, weekend ADR was 6% greater than the equivalent duration of 2019 and has actually been above 2019 levels for 35 successive weeks.

After dropping recently, tenancy in Russia increased to 47% due to strong growth in Russia Provincial and Saint Petersburg.

Airport hotels have actually done best over the previous three weeks with an average tenancy of 55.3%. The top carrying out airport hotels have actually remained in Miami airport areas (81%) followed by Hollywood FL (76%). Cities probably to be impacted by winter weather condition likewise revealed notable airport submarket tenancy levels: Denver Airport/East (72%), La Guardia/Queens North (72%) and JFK/Jamaica (71%). Not unexpected provided the dearth of organization and group travel, the worst performing hotels are in metropolitan locations where occupancy has average 40% over the previous 3 weeks. Big (300+ spaces) city hotels have seen even lower tenancy (34%). Small city hotels, under 75 spaces, saw much better tenancy (51%) with medium sized (in between 75 and 299 rooms) properties at 43%.

Global tenancy, omitting the U.S., ticked down for a 3rd successive week to 39.1%, the most affordable level of the previous 37 weeks. Only 6 countries saw occupancy above 60%, led mostly by destinations: Curaco, the Dominican Republic, Barbados, and the Maldives. The United Arab Emirates and Singapore were the only 2 non-destination locations with similar tenancy as the UAE continues to see strength due to the fact that of Expo 2020 in Dubai, and Singapore sees COVID quarantine-related need.

We have actually seen the very same trend in Urban areas, from 33% three weeks ago to 24% most recently. This pattern makes good sense as January is not a heavy leisure month, and it has been a strong leisure existence that has actually driven need given that the start of COVID. As the month is unfolding, leisure travel is getting. This can be seen in the efficiency of resort hotels that are beginning to trend back up.

The majority of markets (74%) outside the U.S. stay in “Depression” or “Recession” (RevPAR indexed to 2019 in between 50 and 80). Of note, Madrid was up substantially week over week as occupancy increased to 41% with ADR advancing 13%. The city played host to FITUR 2022 (an international tourist fair) from 19-23 January. Even with enhanced weekly efficiency, Madrid remained in the “Recession” category.

Hawaii had the greatest occupancy of any state (66%) followed by Vermont (66%) and Florida (64%). Florida occupancy was up almost two points from the week prior but stayed about 15% below its 2019 level.

Huge Picture

Weekday tenancy (47%) enhanced for a second consecutive week, driven by a stronger Sunday tenancy due to the Martin Luther King Jr. vacation. Otherwise, weekday tenancy would have been flat week over week. We did see a minor improvement in Tuesday and Wednesday tenancy. Weekend tenancy fell from 58% a week ago to 53% this week, and the index to 2019 (88) was the least expensive of the previous four weeks.

While there is little doubt that Omicron has affected travel in the month, we do see reason for optimism. The percentage of hotels with low weekly occupancy (under 30%) has not degraded to levels seen a year back and was rather flat over the previous 2 weeks. Three weeks earlier, nearly a quarter of all U.S. hotels were reporting tenancy under 30%, however in the most recent week, the portion was 18%.

Among the leading 10 countries based on supply, Indonesia had the highest weekly tenancy (52%), followed by U.K. (50%), where tenancy increased almost 5 percentage points week on week. Germany continued have the most affordable tenancy of the top 10 (27%) followed by Italy (27%) and Canada (33%).

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Amongst the leading 10 nations based on supply, Indonesia had the greatest weekly tenancy (52%), followed by U.K. (50%), where tenancy increased almost 5 portion points week on week. Germany continued have the least expensive tenancy of the top 10 (27%) followed by Italy (27%) and Canada (33%).

Cities most likely to be affected by winter season weather condition also showed notable airport submarket tenancy levels: Denver Airport/East (72%), La Guardia/Queens North (72%) and JFK/Jamaica (71%). Hawaii had the highest tenancy of any state (66%) followed by Vermont (66%) and Florida (64%). Weekend occupancy fell from 58% a week ago to 53% this week, and the index to 2019 (88) was the most affordable of the previous 4 weeks.

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