In the first business week of 2023, U.S. hotel occupancy rose to 54.8%, up 6.3 percentage points (ppts) year over year (YoY) and favorable to the comparable week in 2019. Over the first 14 days of 2023, occupancy (51%) was higher than the same 14 days in 2019 (50.3%). Weekday (Monday-Wednesday) occupancy was slightly better (55%) than the weekly total with the Top 25 Markets seeing 60.4% weekday occupancy.
Several large markets reported strong weekday occupancy, led by San Francisco (80.9%), which posted its fifth highest level since the start of the pandemic thanks to the J.P. Morgan Healthcare Conference.
A handful of Top 25 Markets saw occupancy surpass 70%, including Atlanta, Dallas, Miami, Phoenix, and Tampa. Group demand drove some of the growth in the Top 25 Markets as group room nights among Luxury and Upper Upscale class hotels increased to 1.6 million, which was the highest level of the past five weeks. San Francisco was obviously one of the strong group markets with a large event in town.
Occupancy was also high in several central business districts (CBDs) with five of the 20 submarkets reporting weekday occupancy above 70%, co-led by the Dallas and Atlanta CBDs, where weekday occupancy topped 83%. From Tuesday to Thursday, Atlanta CBD occupancy surpassed 92%.
Not surprising, the highest weekday occupancies were seen in hotels that cater to groups and business travel. Upscale hotels saw weekday occupancy surpass 64% whereas Luxury and Upper Upscale topped 62%. As compared to last year, Luxury and Upper Upscale saw the largest growth (25+ ppts) as the segments most impacted by Omicron during Q1 2022.
U.S. weekend occupancy increased to 61.8%, which was the highest level since early December. Thirteen markets had weekend occupancy above 80%, led by Oahu (88.1%), New York City (84.2%), Miami (83.5%), and Orlando (83.4%). Nine of the 13 markets with occupancy above 80% were in Florida. One of Florida’s larger hotel markets, Daytona Beach, is a month out from one of its marquee events, the Daytona 500. Occupancy on the books, as reported via Forward STAR, is already spiking at around 80% for the weekend of 17-18 February.
For the second straight week, nominal average daily rate (ADR) advanced more than 17% YoY with the measure at US$145, the highest level seen for week 2 of a year dating back to 2000. San Francisco saw the largest year-over-year gain in nominal ADR, up by more than 269%. More than half of all markets reported growth of 10% or more with 17 seeing gains of more than 20%, including Los Angeles, Las Vegas, NYC, and Washington, D.C. Real (inflation-adjusted) ADR was slightly below the level seen in 2019.
Nominal revenue per available room (RevPAR) increased 33% YoY to US$79. Real RevPAR completed the week at US$67, slightly below 2019. Like with ADR, San Francisco had the highest growth in nominal RevPAR (+517% YoY), which produced the market’s third highest level since 2000 and its eighth best when adjusting for inflation. New York City and Washington, D.C. also posted strong RevPAR growth of more than 80% YoY. Even when excluding San Francisco, nominal RevPAR for the Top 25 Markets was up by more than 45% YoY.
Global Performance
Global hotel occupancy (excluding the U.S.) increased 3 percentage points compared to the previous week, coming in at 55.1%. While that level was 9.5ppts behind the comparable week in 2019, it was also 13ppts ahead of last year.
Each of the top 10 countries, based on supply, reported year-over-year occupancy growth with the U.K. having the highest weekly occupancy of the group (63.5%). Non-U.S. nominal ADR (US$128) was up 28% YoY with that level of growth for some time. Nominal RevPAR gained 70% YoY to US$68.
China continued to improve with occupancy rising 7.5ppts YoY to 55.3%, which was still 14.4ppts behind the comparable week in 2019. Except for Sichuan, all markets saw improvements in occupancy compared to the previous week. Leading the way was Macau, Fuzhou, Chongqing, and Beijing, all posting week-over-week occupancy growth of more than 15ppts. Nominal ADR showed moderate 1.3% growth from the prior week, up 13.9% on the previous year but 9.4% behind 2019. From an ADR perspective, Shenzhen, Beijing, Ningbo, Macau, and Hangzhou saw week-over-week increases of more than 5%.
Final thoughts
With group demand strengthening and the post-holiday ramp up of leisure demand in much of the world, January and most of the quarter will see strong gains, particularly in the markets that suffered the most with the Omicron outbreak last year.
Looking ahead
We expect U.S. performance next week (week ending 21 January) to feel weaker with little week-over-week change in room demand and occupancy due to the Martin Luther King holiday. Elsewhere in the world, performance will likely continue to strengthen.
