Record Holiday Week Caps Third Year of Recovery for US Hotel Industry
Southwest Airlines Flight Disruptions Boost Bookings of Airport Hotels
The U.S. hotel industry sold more rooms at higher rates in the week between the Christmas and New Year’s Day holidays than ever before, according to the latest weekly data from CoStar hospitality analytics firm STR.
The record holiday season capped a solid third year of recovery from the COVID-19 pandemic. Higher demand and rates were achieved despite a winter storm that derailed some travel plans and mass flight cancellations by Southwest Airlines, which actually drove higher occupancy for airport hotels in the markets most affected by the disruption.
Though the downturn triggered by the pandemic was the most severe ever, the industry has recovered at a quicker pace. Three years after the start of the pandemic, real revenue per available room — adjusted for inflation — is down just 6%. Three years after the start of the Great Recession, real RevPAR was down 18%.
A recession this year is expected to slow the recovery somewhat.
The recovery so far has been led by demand from leisure travelers, or vacationers, though STR performance data has suggested a pickup in demand from business and group travelers, particularly in the fourth quarter of 2022.
For the week ending Dec. 31, U.S. hotels sold 21 million room nights — beating the record set a year ago for this period of 20.7 million room nights. U.S. hotel occupancy for the week, however, was only the fourth highest of the past 23 years since STR began collecting data. Higher hotel room supply means more rooms to sell, which explains the difference between room demand and occupancy.
U.S. hotel occupancy for the week was 54.2%, down slightly from the 54.3% mark set last year and the record 54.9% set in 2016.
Nominal average daily rate for the week was $167, surpassing the record set a year ago by 4.4%. Nominal RevPAR was up 4.2% year over year to $91, which while not a record high was higher than other weeks when the holidays fell on the same days. Adjusted for inflation, real ADR and RevPAR were both above 2019 levels but slightly trailed 2021.
