Labor Day weekend leisure travel and Hurricane Ida-related demand lifted U.S. hotel occupancy out of a five-week slump.
Compared with Labor Day weekend in 2019, which was a week earlier, occupancy was nearly the same, indicating the desire to travel remains strong despite the increase in COVID-19 cases, and occupancy declines over the past several weeks are more due to the return of in-person schools and the slow materialization of business and group travel.
On a total-room-inventory basis, which accounts for temporarily closed hotels, weekly occupancy was 58.8%. The number of temporarily closed rooms was up to 55,000 this week from 48,000 during the previous seven-day period.
Labor Day weekend demand increased the most in Texas, followed by Florida and California. In total, all but eight states reported demand gains during the weekend with total U.S. demand 2% higher during the first two days of this year’s Labor Day weekend than in 2019.
While the weekend was strong, weekday demand fell for a sixth consecutive week, this time by more than 4% week over week. This is normal ahead of a holiday weekend. In 2019, weekday demand ahead of the Labor Day holiday fell by more than 8%. The difference is Hurricane Ida, which raised demand in Gulf Coast locations during the week, mitigating the pre-holiday drop.
Weekday demand declined in 83% of U.S. markets, but evacuations due to Hurricane Ida bolstered demand and occupancy in 10 markets. Mobile, Alabama; Jackson, Mississippi; and Louisiana North all reported weekday total-room-inventory occupancy levels above 75%. Strong weekday occupancy was also recorded in the Florida Panhandle, Alabama South, Mississippi, Houston, Texas East, Louisiana South and Birmingham markets, where weekday total-room-inventory occupancy was in the mid-60% and higher. Weekday hotel occupancy increased by more than 20 percentage points week over week in seven of the 10 markets affected by Hurricane Ida.
Leisure and football destinations performed the best during the weekend, led by Colorado Springs, where weekend total-room-inventory occupancy topped 93%. On the opposite end, the New Orleans market posted the lowest weekend total-room-inventory occupancy at 40%. Overall, 69% of all markets had total-room-inventory occupancy of 70% or better during the weekend, which was the most of the past three weeks.
Most hotels also benefited from the last summer holiday with 84% reporting weekend occupancy above 60%. Nearly one-third of U.S. hotels posted occupancy above 90% during the weekend, the most of the past four weeks. For the week, 59% of hotels reported occupancy above 60%.
Average daily rate continued to stand out. During the first two days of the Labor Day weekend, room rates increased 6.8% over the prior week. Rates were 15% higher than they were during the same two days of the 2019 Labor Day weekend. Adjusted for inflation, ADR was 9% higher on Friday and Saturday.
More than a third of all markets reported double-digit weekend-to-weekend ADR growth. However, weekday ADR dropped 4.5%, which is the largest decrease of the past five weeks. With the decrease in weekday ADR, total week ADR was up 0.4% from the previous seven days with nearly half of all markets reporting lower ADR.
According to STR’s Market Recovery Monitor, total-room-inventory revenue per available room was 93% of what it was for the same week in 2019, indexing 0.3% higher than the previous week.
Weekend total-room-inventory RevPAR increased 16% week over week and was 11% higher than the Friday and Saturday of the 2019 Labor Day weekend. On a 28-day moving average, used to smooth out holiday shifts, 70% of all markets were at “peak” performance, with total-room-inventory RevPAR higher than 2019. Only one market, San Francisco, was in “depression” as its total-room-inventory RevPAR was less than half of what it was in 2019.
STR provides premium data benchmarking, analytics and marketplace insights for global hospitality sectors. Founded in 1985, STR maintains a presence in 15 countries with a corporate North American headquarters in Hendersonville, Tennessee, an international headquarters in London, and an Asia Pacific headquarters in Singapore. STR was acquired in October 2019 by CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces. For more information, please visit str.com and costargroup.com.