US weekly occupancy falls again as Labor Day looms
US weekly occupancy falls again as Labor Day looms
04 SEPTEMBER 2020 7:45 AM

U.S. hotel occupancy fell for the second straight week, but Labor Day weekend could provide the last bit of leisure demand in a shortened summer season.

NASHVILLE, Tennessee—Another week, another slight performance dip for U.S. hotels.

During his weekly video recapping U.S. hotel performance data, STR’s SVP of Lodging Insights Jan Freitag said U.S. hotel occupancy fell for the second consecutive week. During the week of 23-29 August, occupancy fell 27.7% to 48.2%, average daily rate decreased 23.2% to $98.39 and RevPAR dropped 44.5% to $47.38. (STR is Hotel News Now’s parent company.)

“Two weeks ago, occupancy was 50%,” Freitag said. “This last week it was 48.8%. And this week, unfortunately, it was 48.2%. And that is all before Labor Day. We're very curious to see what happens once Labor Day comes and goes and people stay a little bit closer to home.”

Weekend occupancy was 55%, down from 57% a week ago, Freitag said, adding that it seems steady for now.

“We have heard anecdotes about people taking longer weekend trips, just because they can work virtually and because their kids' school is also virtual,” he said. “So, it doesn't really matter where they are. And hopefully, that could be a well-needed boost for the weekend occupancies in beach and mountain destinations.”

Room demand continues to fall as well, down 230,000 rooms or about 1.3% from the past week.

Source: STR, © 2020 CoStar Realty Information, Inc.

“You see that the long-run average over the last nine weeks is now basically just around 1% or so week over week-over-week growth,” Freitag said. “That of course is not great, as I said, especially as we get into the third quarter that traditionally has strong business travel numbers, and we're not sure that those business travel numbers will actually materialize.”

Year-over-year RevPAR decreases continue to lessen from week to week as the number of new COVID-19 cases decreases.

Source: STR, © 2020 CoStar Realty Information, Inc.

Each class segment lost occupancy from the previous week, but the economy class (54.3%) maintained its status at the top in terms of absolute occupancy.

Source: STR, © 2020 CoStar Realty Information, Inc.

McAllen/Brownsville, Texas (78.2%) had the highest absolute occupancy for the week while three Hawaiian markets—Oahu Island (26.6%), Hawaii/Kauai Islands (19.9%) and Maui Island (16.3%)—had the lowest absolute occupancy.

Global outlook
Freitag shared some global room data, which show the number of rooms closed continues to decrease and the global weekly occupancy curve is beginning to flatten.

Source: STR, © 2020 CoStar Realty Information, Inc.

“The occupancy line you see here is sort of plateauing a little bit, but keep in mind, of course, that is also a function of more rooms being open,” Freitag said. “So we're a little bit of victim of our own success as we drive higher demand, as we drive high occupancy, then more rooms are opening that are currently closed, which then depresses the occupancy. But I think overall this is a good picture.”

China continues to lead absolute occupancy ahead of Europe and the U.S., but the occupancy figures for all three regions decreased or remained flat from a week ago.

Source: STR, © 2020 CoStar Realty Information, Inc.

“Vacation season in Europe, which is basically August, is ending, and Labor Day in the United States looms large, so we will monitor this very, very closely going forward,” Freitag said.

For Freitag’s full commentary, 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 2 September and edited and produced by CoStar Group. HNN is a division of STR, a CoStar Group company.

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