When we began to receive data covering the weekday (Sunday - Thursday) and weekend (Friday - Saturday) supply, demand and revenue results of a representative group of U.S. hotels back in 1996, we did not expect to find that weekend room occupancy overall was better than that of weekday performance. Not only that, but the changes in demand for rooms on Friday and Saturday nights is apparently growing at a more rapid pace. For the twelve months ended September 1998 ( the latest figures available as this is being written), room occupancy for the Friday-Saturday period was 67.7 percent compared with 62.6 percent for Sunday through Thursday nights. Demand was rising at a rate of 6.3 percent on weekends versus only 1.5 percent for the weekday period, and RevPAR was increasing at 4.3 percent compared with 3.7 percent. Admittedly, those ratios are based on a smaller sample of census rooms than we normally have for our STAR and Historical TREND reports, but we believe they are significant enough to merit publication. Just a cautionary note: weekend occupancy may be better than during the Sunday through Thursday period, but those five days will produce 72 percent of the anticipated total revenue in 1998, while the weekend business accounts for no more than 28 percent, if the relationships of departmental revenues and expenses are the same in both periods.

We suggest that the following factors have had a favorable influence on the weekend performance:

  • Most airlines offer rate discounts for trips that include a stopover on Saturday.
  • Hotel in the major urban markets have special weekend packages that include meals and entertainment for Friday and Saturday stays.
  • Traveling executives are increasingly taking their families on business trips and staying over the weekend for a short vacation.
  • Group meetings on weekends are becoming more common in view of the need to cut costs; most hotels offer discounts for weekend meetings and they are easier to schedule.
  • Some portion of the use of extended-stay facilities includes weekend occupancy.
  • The recent run-up in the value of the stock market has created many U.S. households with more disposable income available for travel.

In order to determine how the various industry segments are affected by the trend toward the weekends, we have analyzed the available data, cross-tabulated by Price Levels and Location. The text, charts and tables that follow are the results of that analysis.

DAILY OCCUPANCY RATES

Over two thirds of the more than 850 thousand rooms from which we now collect weekday/weekend test data calculate that information on a daily basis. Although we are not yet prepared to publish occupancy by day of the week, it will soon be possible to analyze the impact of holidays that occur early and late ( i.e.: Easter; Labor Day) and special events (i.e.: the Olympics). In the interim, in order to provide some guidance as to the relative occupancy levels of the Sunday-Thursday and Friday-Saturday periods, we did some research on past studies and reports. The available literature covering the lodging industry contains very little factual data on occupancy by day of the week. However, during the ë50s, occupancy on weekends in the industry had declined to the point where one consultant rather facetiously suggested in an article in the trade press in April 1956, that hotels might consider operating on a five-day week. The recommendation was made mostly for "large, metropolitan hotels whose fixed overheadÖ.make(s) it almost impossible to operate profitably at less than 50 percent occupancy". The article made a splash in the financial press and created a storm of questions as to how it could be accomplished, apparently without considering the strictly illegal corporate collusion necessary to decide which properties would remain open and which would close. At that point, hotel occupancies nationally had fallen from 93 percent during the war years to 72 percent (1955). On weekends, occupancy levels were apparently in the 50 percent range or below.

We analyzed all of the information we could find and , by means of various statistical techniques including regression analysis, determined the relationship between the occupancy for each day and the combined amounts for weekdays and weekends. Assuming that those relationships would remain much the same regardless of the annual occupancy, we applied the ratios to the weekday and weekend results for the 12 months ended September, 1998. Although definitely what statisticians call a "SWAG", they illustrate the impact of the marketing strategies used by operators today. The comparison is shown in Chart 1. The same technique could be applied to any known combination of weekday and weekend ratios.

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By Mark Lomanno, Executive Vice President, Smith Travel Research

Chuck Ross (STR)
(615) 824-8664
STR