Summer update 4: Transient improvement, location update

HENDERSONVILLE, Tennessee—Looking at the July numbers released two weeks ago, the transient numbers for the month showed glimmers of hope. Occupancy percent change for luxury hotels was up 2.8 percent, and upper-upscale hotels posted a 1.1-percent increase.

The gains were not just confined to set chain scales. Several markets experienced high occupancy percent changes for the transient segment as well: Orlando, Florida (+18.5 percent); Washington, D.C. (+12.3 percent); San Francisco, California (+9.1 percent); Nashville, Tennessee (+7.9 percent); and New Orleans, Louisiana (+7.9 percent). Orlando and New Orleans even experienced a positive transient revenue-per-available-room percent change.

In July, the transient occupancy percent change for large hotels was also positive (500 to 750 rooms was +3.5 percent, and 750 to 1,000 rooms was +3.4 percent). The same metric for the top 25 markets was positive, too (+2.4 percent). Additionally, the transient occupancy percent change for the total U.S. for weekends was positive (+3.8 percent, including a 6.1-percent increase on Saturdays alone).

The weekly numbers for the past several weeks have remained practically unchanged. Occupancy percent change is still in the negative six-to-seven range. ADR percent change is still in the negative nine-to-10 range, and RevPAR percent change is still in the negative 15-to-16 range. No markets are performing exceptionally, although D.C. seems to be experiencing single digit negative RevPARs consistently, which is better than the rest.

The question throughout this series of articles is: Who’s having a good summer? In pursuit of this illusive answer, it is worth taking a look at the standard STR location types to see how they’re performing during the summer months. To do this, I compared percent changes for the key indicators during the first five months of the year to the same percent changes for the three months of the summer (using daily data). The results were interesting:

All location types experienced an improvement of occupancy percent change. The most significant improvements were for urban (+4.3) and resort (+4.9) locations, which benefitted the most from the summer months. Next, when it came to occupancy, was the suburban (+2.3) and airport (+2.7) locations with moderate improvements. Interestingly enough, interstate and small town, which had the best occupancy percent change in the beginning of the year (both -9.2) experienced the least amount of improvement during the summer (+0.3 and +0.2, respectively). Intuitively, one would have thought the interstate location would have experienced even more summertime improvement, but not so.

Almost all location types experienced a decrease in ADR percent change. The most significant decreases were for urban (-3.6) and airport (-3.0) locations. Perhaps these hotels were discounting the most to try and influence summer travelers. Suburban (-1.8), interstate (-2.1), and small town (-2.0) locations all experienced a moderate decrease, so there was some discounting at all of these hotels. The only location type where the ADR percent change increased during the summer months, although just slightly, was resort (+0.2). These hotels had the lowest ADR percent change during the beginning of the year (-12.0), so this isn’t much of a surprise.

When it comes to RevPAR percent changes, the results are mixed. Interstate (-1.5) and small town (-1.5) location types experienced a moderate decrease during the summer. Urban (+0.5), suburban (+0.4) and airport (-0.2) hotels were relatively flat. Resort hotels were the summertime winner, experiencing a somewhat strong improvement of RevPAR percent change at +4.6 points.

In the next update, I’ll look at the last few weeks of summer before and after Labor Day, continuing to look for good news.

Read "Summer update 1: Some recent signs of life."
Read "Summer update 2: Continued, gradual improvement."
Read "Summer update 3: Summer doldrums with bright spots."