U.S. Hotels - September 2022 Commentary

September 2022 Top-Line Metrics (percentage change from September 2019)

• Occupancy: 66.7% (-0.6%)
• Average daily rate (ADR): US$154.32 (+16.9%)
• Revenue per available room (RevPAR): US$103.00 (+16.3%)

Key points from the month:

• Demand surpassed the pre-pandemic comparable for the second time, while real RevPAR was ahead of 2019 for the first time.
• For the first time on record, September occupancy outpaced August, largely due to heightened shoulder day and weekend occupancy.
• Group demand remained nearly 4% below the pre-pandemic comparable, but group RevPAR outpaced 2019 for the first time since the start of the pandemic.
• Top 25 Market demand fell just 0.5% short of the pre-pandemic mark, the best such demand index to date.
• U.S. hotel gross operating profit per available room (GOPPAR) improved from the month prior and exceeded the pre-pandemic comparable.

U.S. monthly demand exceeded the pre-pandemic comparable for the second time in the pandemic-era but first time this year.

The gain in demand helped real (inflation-adjusted) revenue per available room (RevPAR) eclipse the 2019 comparable for the first time since the pandemic began.

Also making news in the RevPAR world was the group segment, which eclipsed its 2019 comp for the first time in the era.

All of this supports September being a strong month, but it is important to note there was a calendar impact in the equation.

September traded a Sunday and Monday for a Thursday and Friday, which was a net positive. Shoulder performance has been strong, but Thursday is always a higher demand night than Sunday.

Holiday shifts favored the calendar as well. Labor Day weekend shifted into September this year after hitting the August calendar in 2019. That weekend pre-Labor Day is typically high occupancy (80% in 2019), and this year was no different (79%).

Segmentation
After a slow August, transient demand recovery once again outpaced group – although just barely.

The strong weekend/shoulder occupancy seen nationally came primarily from transient demand, helping push demand just 0.2% below pre-pandemic level.

Group demand recovery came in slightly weaker, at 3.7% below pre-pandemic levels. While that may have been slightly below transient recovery, it was still the best group demand index to date.

Groups have one thing transient does not at this stage, and that is equitable recovery across the days of the week.

Weekends do not have a significant recovery advantage over weekdays, which suggests this recovery is sustainable.

Markets
The Top 25 Markets had a strong September. Occupancy improved across all days of the week, although weekends were once again the standout.

The corporate-heavy Top 25 Markets are having quite the conference season. When removing the two Labor Day-related weeks from the chart below, because the comps were not apples to apples, there is a clear group-driven divide in pre-Labor Day (summer) and post-Labor Day (conference season) weekday occupancy.

The aforementioned equitable group recovery and weekend-driven transient recovery in the Top 25 Markets is a contributing factor, but it is clearly visible that weekday group occupancy is recovering ahead of transient group occupancy.

Monthly P&L

U.S. hotel GOPPAR improved from the month prior and exceeded the pre-pandemic comparable. The cost of labor per available room (LPAR) came in higher than the pre-pandemic comparable for the first time. The metric moved ahead of the 2019 comparable due to continued high levels of hospitality unemployment and more spending on contract labor.

• GOPPAR: US$84.03
• TRevPAR: US$222.97
• EBITDA PAR: US$60.71
• LPAR (Labor Costs): US$71.52

Thirteen of the major markets realized both GOPPAR and TrevPAR levels higher than the 2019 comparables.

Latest Weekly Data

The week of 16-22 October, U.S. hotel occupancy was almost flat, dipping 0.4 percentage points week over week to 69.9%. Read more in our latest Market Recovery Monitor.