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It Likely Doesn’t Get Any Better for 2023: US Weekly Hotel Occupancy Peaks at 73%

Absolute Occupancy Best Since August 2019, but Trails That Year’s Peak Week By Nearly 5%

Originally seen HERE.

Weekly occupancy across the U.S. hotel industry reached its likely peak of the year — and the best since August 2019 — while outside of the U.S., the high mark keeps getting higher.

CoStar data for the week ending July 22 shows U.S. weekly occupancy was 72.9%, the highest level since the week of Aug. 10, 2019, and up 0.4 percentage points versus a year ago. While affirming the resiliency of leisure travel, the level still pales next to the comparable week of 2019, when occupancy reached 77.6%.

As this is traditionally the peak week each year for U.S. occupancy, the level is expected to begin its seasonal downturn as summer comes to an end. However, year-over-year growth is still expected. While slower than a year ago, U.S. demand is advancing, especially in the top 25 markets and on the weekdays.

Meanwhile, excluding the U.S., weekly occupancy around the globe notched up to a new post-pandemic high at 72.5%. That’s up just 0.1 percentage points from the record set in the previous week. Outside of the U.S., comparisons to 2022 and 2019 have been easier because of the slower pandemic recovery in many other countries.

Global occupancy has set post-pandemic records seven times in 2013, but there is a ceiling and it likely will peak soon and then also trend down.

US Performance

U.S. hotel average daily rate continued to grow, up 1.5% year over year as revenue per available room improved 2% to $113. For the month of July so far, RevPAR is up 2.2% year over year, mostly on the strength of ADR, which is up 1.8% over the same period.

New York City led the nation in occupancy at 90.9%, its highest since mid-December 2019. Compared to the same week in 2019, New York’s occupancy was less than a point off, down 0.8 percentage points. Of course, the market is different now versus then as there are 7.1% fewer available rooms due to permanent and temporary closings.

More than 60% of the 167 markets posted occupancy above 70% for the week, the most in a year. Eight markets reported their highest occupancy since the end of summer 2019, including Boston at 88.2%, Indianapolis at 78.5%, Orange County/Anaheim at 86.8% and Seattle at 88.7%.

While occupancy reached a 206-week high overall, it dropped in 47% of markets. The largest declines were in markets that had higher occupancy last year than in the same week of 2019.

In the top 25 markets, occupancy grew 1.5 percentage points year over year to 76.5%, compared to a decrease of 0.2 percentage points across markets outside of the top 25. Top 25 market occupancy was at its highest level since late 2019 and has been above 70% in 10 of the past 12 weeks. The top 25 markets also accounted for nearly all of the ADR growth for the week.

Along with strong performance in the largest markets, weekday occupancy and ADR point to higher demand for hotels from business travelers.

Weekday (Monday-Wednesday) occupancy for the week was 73.1%, which is also the highest level since late summer 2019, and it led the week’s total weekly occupancy gain. In the top 25 markets, weekday occupancy reached 76.2%, up 1.8 percentage points year over year. Weekday ADR increased 2.5% year over year across the U.S. and 3.2% across the top 25 markets. Overall, total U.S. ADR was slightly below the rate of inflation.

By chain scale, upper-upscale hotels posted the largest occupancy gain during the week, up 3 percentage points year over year to 77.4%. The highest absolutely occupancy was in the upscale segment at 79.5%, which was up 1.9 percentage points year over year.

Global Performance

Excluding the U.S., weekly global hotel occupancy achieved another post-pandemic high at 72.5%. The measure was up 5.4 percentage points year over year. ADR continued to grow strongly, up 11.6% year over year, as RevPAR improved 20.5% year over year to $113, the fourth-highest result since March 2020.

Occupancy for the top 10 countries based on supply was the second highest result since the start of the pandemic, up 6.7 percentage points year over year to 74.9%. Top 10 ADR increased 5.6% year over year, driving a 16% improvement in RevPAR.

As it has for the past 10 weeks, the United Kingdom continued to lead the top 10 countries with occupancy of 83.3%, up 0.7 percentage points year over year.

Spain took the second place spot within the top 10 as occupancy climbed 2.1 percentage points year over year to 78.6%. ADR increased 2.8% over the same period. ADR across Spain has been above $180 for the past four weeks, and the step up in the metric coincides with the end of the school year in Europe.

Japan and China continued to post the highest occupancy growth, up 13.7 percentage points year over year and 11.2 percentage points, respectively. Weekly occupancy was 71.6% in Japan and 75.7% in China. China’s occupancy was at its highest level since the week ending Aug. 24, 2019.