Factors driving, dragging US hotel market performance
Factors driving, dragging US hotel market performance
16 OCTOBER 2020 8:00 AM

In an unusual year that resets many of our preconception of a “serious downturn,” STR highlights the best-performing (or “less bad”) and the worst-performing metropolitan markets through the third quarter.

HENDERSONVILLE, Tennessee—With nine months of the year now preliminarily “on the books,” it seems an appropriate time to provide a brief highlight of key trends as well as the best- and worst-performing markets so far.

STR examined year-to-date 2020 percentage change on all key hotel industry metrics for the 96 U.S. metropolitan markets (across 165 STR markets in total) and compared those with 2019 levels. (STR is the parent company of Hotel News Now.)

Results indicate the top 25 hotel markets have been hit disproportionally harder by the 2020 economic downturn than non-top 25 markets.

Most every U.S. metropolitan market has shown negative YTD change across every hotel metric. Through Q3, preliminarily only four markets (Florida Keys, West Palm Beach, Miami and Maui) have shown modest average daily rate increases, and 30 markets in total experienced small YTD supply gains.

Many better-than-average YTD performing markets have:
• greater popularity as a drive-in leisure destination;
• closer proximity to natural disasters (such as coastal hurricanes, or tornados in the case of Chattanooga, Tennessee-Georgia); and
• captured a late-winter/early-spring seasonal peak before the full hotel crisis had bloomed in mid-April.

The worst-performing markets YTD may have had limited/restricted access (such as Hawaiian markets) or were major urban centers that were reliant on group and/or business travel.

The McAllen/Brownsville, Texas, market, with its heightened federal border security activity along with a sustained health care worker influx, vastly outpaced other markets across multiple YTD performance metrics. This market also experienced top growth in 2019.

Boston leads all markets in YTD percent declines for revenue, occupancy, ADR and revenue per available room. Had New York City’s room supply remained stable rather than vastly shrinking during the period, however, this market would have likely shown the greater drops in YTD occupancy and RevPAR.

M. Brian Riley is a research analyst with STR’s Market Insights division.

This article represents an interpretation of data collected by STR, parent company of HNN. Please feel free to comment or contact an editor with any questions or concerns.

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