After a steady increase in performance over the summer, U.S. hotels are seeing numbers similar to that of a month ago as demand slows again.
NASHVILLE, Tennessee—The steady weekly performance increases the U.S. hotel industry enjoyed over the summer appear to have stalled, the latest data from STR shows.
In his latest video on U.S. hotel performance, STR SVP of Lodging Insights Jan Freitag said the number of COVID-19 cases for the week ending 19 September increased to 280,000 from the prior week’s 240,000. At the same time, the revenue-per-available-room decline was just under 52%. STR is the parent company of HNN.
“That is actually the worst RevPAR performance in the last eight weeks,” he said, cautioning that while there is a long-term connection between COVID case increases and RevPAR decreases, this week’s figures are a coincidence.
Looking to TSA data, Freitag said the number of people flying decreased again for the third time in four weeks. As early as around 4 July, the average weekly increase of people traveling through American airports was less than 1%, which directly affects the number of hotel rooms sold.
“For the last five weeks, we’ve seen very, very slow, actually negative, week-over-week-over-week average growth rate, and even prior to that, it was just sub-2%,” he said. “The weeks of double-digit room demand growth on a weekly basis are firmly behind us.”
For the week ending 19 September, the U.S. hotel industry is back to mid-August performance numbers, Freitag said. Labor Day’s bump was an outlier. It will be interesting to see starting next week if markets that have shown positive RevPAR trends will further deteriorate, he said.
It should come as no surprise that the top 25 markets continue to trail all other markets in terms of occupancy, Freitag said. Markets outside of the top 25 have been able to sell over 50% of their rooms while those in the top 25 are able to sell just over 40%. Without group and corporate transient business, all other markets have had a leg up on the top 25.
Despite summer leisure business, August occupancy was just below 50%, down 32% compared to August last year, Freitag said. Again, that is because of the lack of corporate transient and group demand. Rates were down by almost 23%. Putting those together, results in RevPAR and room revenue were down almost half of what they were a year ago.
“Looking at that 47.3% decline, historically speaking, yes of course it’s much better than what it was in April at -80%, but it’s still so, so, so much worse than what we saw post-9/11 or post-2009,” he said.
The industry will need to overcome lack of group travel and corporate transient demand, Freitag said. Using a chart created by CoStar, he said the hypothesis is that for business travelers to go on business trips, they need a counterpart who is in their place of business in their office. When looking at markets with long commutes compared to the number of people taking public transportation, the question becomes when people are more comfortable returning to their workplaces, will they feel comfortable taking public transportation? If the answer is no, the question then becomes whether there will be enough parking spots.
“This is something that we’re watching very, very closely,” he said. “The question is, indeed, will office workers return in force, will office occupancies be as high as they were in 2019 given these constraints, specifically of long commutes and working in areas that need them to have access to public transit.”
Following this edition, Freitag is moving his U.S. hotel performance video series to a monthly format.
For a complete analysis of the week, 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 23 September and edited and produced by CoStar Group. HNN is a division of STR, a CoStar Group company.