Pace of Decline in US Hotel Demand Slower Than in Past Years

The seasonal slowdown in US hotel demand continues, but on a more gradual slope than in past years as summer gives way to fall.

The latest data from CoStar’s hospitality analytics firm STR shows that the US hotel industry sold 460,000 fewer rooms in the week ending Aug. 20 compared to the previous week — a week-over-week decline of 1.7%. In the comparable week of the years 2000 to 2019, the week-over-week demand decline averaged 4.1%.

Despite the more moderate seasonal decrease thus far, demand is expected to take a sharper dip until the week of the Labor Day holiday and then moderate after.
The wild card will be group demand. A strong fall conference season, which some hotel executives are touting based on forward bookings, could further offset seasonal declines.

Occupancy for the week ending Aug. 20 was 67.3%, 1.2 percentage points lower than the previous week. Nominal average daily rate fell 1.1% week over week to $151, which is 17% higher than in 2019 and 10% greater than a year ago. Nominal revenue per available room contracted 2.8% week over week to $102, but remained ahead of 2019 by 12% and was up 17% from a year ago. Inflation-adjusted, or real, ADR was ahead of 2019 levels by 1%, whereas real RevPAR was below that benchmark by 3%.

Unlike in the previous week, hotel demand was down every day of the week, with the decline slightly weighted on the weekend. Friday and Saturday demand was down 2% week over week compared to a 1.7% decline Monday to Wednesday and a 1.5% decline on Sunday and Thursday.
While hotel demand — the number of room nights sold — has decreased week over week, it is only 1% lower than 2019 levels. Occupancy is 2.8 percentage points lower than in the comparable week of 2019 and 3.7 percentage points higher than a year ago. The difference between the demand and occupancy comparisons to 2019 is supply, which has increased by 2.6%.

Overall, the largest declines in hotel demand were in markets outside of the top 25, down 1.9% week over week and down 3% on the weekend. The primary driver of the demand declines is likely the start of school. The number of school districts beginning fall classes increased significantly in another nine states, including Texas. Overall, 64% of K-12 school districts covered in STR’s 2022-23 School Break Report have begun the school year.

Industry nominal ADR has fallen in each of the past four weeks, but the comparison to 2019 has strengthened. Three weeks ago, weekly nominal ADR was 15% greater than in the comparable week of 2019. For the week ending Aug. 20, nominal ADR was 17% higher than in 2019. Real ADR also surpassed 2019 after being at a deficit in the previous two weeks.

While industrywide nominal ADR was down, 40% of hotels reported flat to increasing ADR during the week, with 6% of hotels raising rates by more than 10% compared to the previous week. Of the hotels with ADR up 10% or greater week over week, 22% are small economy hotels, with fewer than 75 rooms; and more than half are in suburban and small-town locations.

Similar to ADR, nominal RevPAR indexed to 2019 has strengthened over the past two weeks, increasing from 9% to 12% greater than the comparable week of 2019. Real RevPAR also gained ground at only 3% below the 2019 level; three weeks ago, the deficit was 7%.

During the week, 140 of the 166 STR-defined markets had nominal RevPAR above 2019. With real RevPAR, 86 markets are above that benchmark. Over the past 28 days, 74 markets are at “peak” as real RevPAR is above 2019. Eighty-three markets are in “recovery” as real RevPAR is between 80% and 100% of 2019’s value. Only nine markets — including Minneapolis; Philadelphia; Portland, Oregon; and San Francisco — are in “recession” as real RevPAR is between 50% and 80% of 2019.


Hotel markets in Denver, New York and Seattle all reported weekday occupancy above 75% as did 23 other markets outside of the top 25. Portland, Maine, posted the highest weekly occupancy of all markets at 91%.

Weekday occupancy in the top 25 markets mirrored the industry. Central business districts, however, experienced a sharper decline with weekday occupancy falling by 2.5 percentage points week over week to 64%. There were a few standouts as Chicago, Los Angeles, St. Louis and Tampa, Florida, all reported growth in weekday hotel occupancy. CBD weekday occupancy ranges from 78% in Boston to 40% in New Orleans/French Quarter.

Even with the seasonal drop in demand, eight markets, mostly in areas where school has not started — including Albany, New York; Pittsburgh; and Cincinnati — reported their highest levels of demand since the start of the pandemic.

Nineteen hotel markets — including Atlanta; Austin, Texas; Charlotte, North Carolina; Dallas, Nashville and Savannah, Georgia — continue to enjoy their highest summer demand ever.
Over the 12 weeks of summer so far, three markets — San Diego, Seattle and Oahu — have had occupancy surpass 70% in every week, with Oahu above 80% in the past eight weeks. Denver, Los Angeles and New York City have been above the 70% threshold in 11 of the past 12 weeks. NYC occupancy continued to trend down from its peak of 89% in early summer to 77% this week.

Chicago and San Francisco have also had a decent summer season with occupancy above 70% in 10 of the past 12 weeks. New Orleans weakened further with occupancy dropping to 50%. The market has only surpassed 70% once this summer season.

Isaac Collazo is VP Analytics at STR.

This article represents an interpretation of data collected by CoStar’s hospitality analytics firm, STR. Please feel free to contact an editor with any questions or concerns. For more analysis of STR data, visit the data insights blog on STR.com.

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