US RevPAR not much better, but there are some positives
US RevPAR not much better, but there are some positives
31 JULY 2020 7:22 AM

While some vacations are happening in the U.S., COVID-19 cases continue to rise and RevPAR is not getting much better. However, there are some signs of improvement for global submarkets, according to data from STR.

NASHVILLE, Tennessee—The U.S. hotel industry has a ways to go in terms of pandemic recovery, but some progress is being made.

During his weekly video to discuss U.S. hotel performance, Jan Freitag, SVP of lodging insights at STR, parent company of Hotel News Now, said weekend occupancy for 24 and 25 July was 55.8%, “so clearly, summer vacations are still in full swing and people who would have been ‘stuck at home’ are eager to get out.”

With that being said, the number of COVID-19 cases continues to increase. Freitag said the velocity is changing, so while number of cases from the prior week compared to last week is basically the same, roughly 460,000, “what that means is that for the last two weeks, we counted roughly a million new COVID cases in the United States.”

The year-over-year RevPAR decline for the week was 54.8%, “which is a little bit better than it was in the prior week, and we’re basically on par with two weeks ago,” he said.

But the rate of change is slowing, Freitag said.

“RevPAR is getting not much better. It’s getting slightly incrementally better, but the nice gains that we saw early in May and June are certainly a thing of the past,” he said.

Freitag said this is reflected in the number of rooms sold.

“Yes, the number of rooms sold increased compared to the prior week, but you see that the percent change is only 1.3% and the average for the last six weeks now stands at sub 3% compared to 8.3% for the weeks ending between 11 April and 13 June,” he said.

That means occupancy growth is also slowing.

The occupancy in China last week topped 60%, and Europe is “rapidly accelerating” with occupancy just under 40% but the U.S. stands at 48.1% and isn’t moving much.

“Unfortunately, it’s probably not too early to call the disconnect between the China results and the U.S. results. In the past, we had suggested that what happens in China eventually four, five, six, seven weeks later would be replicated in the U.S. I am not sure that that relationship still holds today,” he said.

“Why is that? Clearly wearing masks has a lot to do with it.”

Looking at the positives
There are some encouraging points in the data, Freitag said.

“What you’re clearly seeing is that for each one of the global submarkets, all 900 of them or so, there is clearly a sign for betterment,” he said. “Improvement along the lines of occupancy where we used to see most of the occupancies fall in the sub-50% and certainly sub-25% bucket, we’re now seeing a lot of submarkets that are seeing occupancies of over 75%.“

The number of closure rates is also rapidly decelerating, he said. Increases in room demand is followed by ADR acceleration, and European ADR acceleration is pretty rapid and the U.S. is seeing improvement since its lowest point in early April, he said.

Watch the video below for more weekly insights from Freitag.

Editor’s note: The video included in this article was filmed by Jan Freitag, SVP of lodging insights at STR, on 29 July and edited and produced by CoStar Group. HNN is a division of STR, a CoStar Group company.

1 Comment

  • Robert Rauch July 31, 2020 10:32 AM Reply

    Respectfully disagree that there is some good news. China is not a democracy and as such has virtually no connection to US performance. Two, corporate and group is dead and leisure will end on Labor Day. Three, we will have run out of PPP dollars by then. Bottom line, our industry needs a lifeline and politicians are trillions apart. We lose unless AH&LA is successful in getting another PPP round somehow.

Comments that include blatant advertisements or links to products or company websites will be removed to avoid instances of spam. Also, comments that include profanity, lewdness, personal attacks, solicitations or advertising, or other similarly inappropriate or offensive comments or material will be removed from the site. You are fully responsible for the content you post. The opinions expressed in comments do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Please report any violations to our editorial staff.