With the holiday rush over, U.S. hotel performance declined in the first week of January to a level that suggests continuing weakness in business travel demand due to concerns over the COVID-19 omicron variant.
Historically, the first week of January is a slower week for U.S. hotels anyway, but seasonality doesn’t account for the entirety of the loss in demand.
U.S. hotel industry occupancy dipped to 45.4% for the week ending Jan. 8, which was eight percentage points lower than what it was in the comparable week of 2019 but eight percentage points higher than a year ago.
The week was held back by weekday occupancy (43%), which was the lowest since mid-February 2021. Weekend occupancy was much better at 51%.
The highest occupancy on record for the first week of January was 56.8% in 2018, according to data from STR, CoStar’s hospitality analytics firm. The occupancy recorded this year was among the lowest — better than the level reached in 2000 and 2011, but worse than most of the early 2000s.
However, the industry remains on a recovery trajectory with signs that travel will pick up again.
In its recent earnings call, Delta Airlines reported that bookings are regaining momentum for early February and that omicron concerns pushed back its recovery by about 60 days. Delta’s December demand was about 70% of December 2019’s load.
In comparison, U.S. hotel industry demand in December was 99% of the level reached in 2019. Demand for the week of Jan. 8, which historically is among the lowest, was 88% of 2019.
While the latest weekly data shows the recovery slowed, the industry is in far better position than it was a year ago.
For the week of Jan. 8, U.S. hotel industry revenue per available room was 81% of what it was in the comparable week of 2019 — the lowest index to 2019 of the past 31 weeks, but still within the “recovery” range, according to STR’s Market Recovery Monitor.
The previous week, nearly all U.S. markets reported “peak” RevPAR, exceeding 2019 levels. That percentage dropped to 36% of markets at “peak” performance — the lowest of the past 31 weeks.
Weekend RevPAR improved, indexing at 103% of the 2019 level — among the lowest index in some time, but not the worst. On a 28-day moving total basis, RevPAR remained above 2019 with an index of 105%, down from 108% a week ago, with 83% of markets at “peak” RevPAR.
As expected, average daily rate fell from a record high in the previous week to a level that was 95% of what it was in 2019, the lowest 2019 index since June 2021.
Even though ADR declined, 61% of U.S. most markets reported weekly ADR ahead of 2019. In the previous eight weeks, 88% of all markets had ADR above 2019 levels.
Like occupancy, weekend ADR bounced back, exceeding the level achieved in 2019 by 9%, which is more in line with previous-week performance.
Market-level occupancy varied from a high of 79% in the Florida Keys to a low of 28% in rural Maryland. Fifteen markets — nine of them in Florida — reported hotel occupancy of 60% or better. Overall, 35 of the 166 STR-defined U.S. markets reported higher occupancy than in the same week of 2019 — the smallest number of markets to do so in the past 10 weeks.
For the total U.S., occupancy was 85% of what it was in the comparable week of 2019, which was the lowest index since the end of May 2021. Nearly one-quarter of all U.S. hotels reported occupancy under 30% for the week, which was slightly less than a week ago.
The top 25 markets fared slightly better than the rest of the nation with weekly occupancy of 47%, but the top 25 index to 2019 was much weaker at 78%, a 10-week low.
No top 25 market reported weekly occupancy above the level achieved in 2019, and occupancy ranged from 66% in Miami to 33% in Chicago. Seven markets reported occupancy below 40% for the week, including Washington, D.C.; Boston; San Francisco and Minneapolis.
Occupancy was even lower among the 17 submarkets categorized as central business districts, where occupancy was 35% for the week. Four central business districts — Dallas, Los Angeles, Miami and Tampa — had occupancy above 50%, led by Dallas at 56%. The lowest occupancy submarket for the week was Branson, Missouri, at 12%.
By segmentation, airport hotels posted the highest weekly occupancy at 55%, which could be the result of continuing cancellations by airlines due to staffing shortages and weather-related issues, but in 2019, airport locations also led the nation in occupancy. Resort hotels followed next at 48%. Not surprising, the lowest weekly occupancy (38%) was in urban hotels, where more than a third of hotels reported occupancy under 30% for the week.
Isaac Collazo is VP Analytics at STR.
This article represents an interpretation of data collected by CoStar’s hospitality analytics firm, STR. Please feel free to contact an editor with any questions or concerns. For more analysis of STR data, visit the data insights blog on STR.com.
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