The first weekly hotel performance report following Labor Day weekend shows where the U.S. hotel industry could be headed as summer comes to an end.
NASHVILLE, Tennessee—Following Labor Day weekend, U.S. hotel performance came back down to the new normal.
In his weekly video highlighting U.S. hotel performance, Jan Freitag, SVP of lodging insights for Hotel News Now’s parent company STR, said the performance declines being slightly worse during the week of 6-12 September than the previous week aren’t that much of a surprise. Data from STR shows revenue per available room decreased by 48.1% to $47.96 from 6-12 September after declining by just 32.8% from 30 August to 5 September.
With that said, the number of COVID-19 cases in the U.S. continue to decrease to below 250,000 per week, which Freitag said hopefully could be “an impetus for continued leisure travel.”
During the week, the U.S. hotel industry sold approximately 270,000 fewer roomnights, equating to a 1.6% demand decrease, Freitag said.
“You see that for the last 11 weeks, the average growth week over week over week is sub-1%,” Freitag said. “And that is arguably in the best of times in the summer, when there was healthy leisure demand. So, we're a little worried about what happens now that most of the leisure travelers are going to stay off the road, but there is no corporate demand and there is very limited corporate transient demand.”
Labor Day provided a lift for the previous week, but that’s not a sign of more positive trends, Freitag said.
“Last week, the (+2.9%) really is an outlier because of Labor Day,” he said. “And what that implies then is if you sort of take that out that for the last three or four weeks, we saw declines week over week over week.”
U.S. occupancy on 6 September—the Sunday of Labor Day Weekend—was 57.1%, an 8.8% increase year over year. Freitag added that luxury class RevPAR for that Sunday also increased by 0.9% year over year.
The top-performing markets in the U.S. show continued impact from Hurricane Laura in the Southeast U.S. and from the wildfires on the West Coast, with high absolute occupancy in parts of Louisiana, Oregon and California, Freitag said.
Conversely, the markets that didn’t perform as well in terms of occupancy during the week include Boston (33.2%), Orlando (31.6%) and three Hawaiian markets (Oahu Island at 21.1%, Hawaii/Kauai Islands at 17.3% and Maui Island at 17.3%). Freitag noted that a significant amount of Hawaiian properties remains temporarily closed.
A look at all of STR’s 652 submarkets shows that the number of submarkets showing year-over-year RevPAR growth is slowly increasing.
“What you're seeing nicely here is that there seems to be an upward trajectory that more and more and more submarkets are actually showing positive RevPAR percent change,” Freitag said. “The outlier of course is the week that includes the Labor Day weekend where we had roughly a sixth or so of all U.S. submarkets show positive RevPAR growth.”
A look at absolute occupancy in China, Europe and the U.S. shows China hotel occupancy continues to trend upward while hotel occupancy in Europe and the U.S. seems to be plateauing, Freitag said.
“China basically recovered to if not totally normal then basically on its way back to normal with normal seasonal fluctuations,” Freitag said. “Unfortunately, the occupancy growth trajectory for Europe and the U.S. now seems to have stalled. And especially now that summer is over, it's going to be very interesting to see how those occupancies behaves with very limited corporate transient and almost no corporate group travel on the books.”
For Freitag’s complete analysis, watch the video below:
Editor’s note: The video included in this article was filmed by Jan Freitag, SVP of lodging insights at STR, on 16 September and edited and produced by CoStar Group. HNN is a division of STR, a CoStar Group company.