- The U.S. hotel industry sees varied performance, with ‘normal’ Memorial Day demand but a significant drop in RevPAR, particularly in the West South Central region.
- Globally, hotel performance remains strong, except in China, where significant declines were noted.
Memorial Day Performance and Its Aftermath The U.S. hotel industry experienced a “normal” Memorial Day in terms of demand, with revenue per available room (RevPAR) slightly down by 0.6% compared to the previous year—the slight increase in hotel supply over demand led to a drop in occupancy rates. The week following Memorial Day saw fluctuations, with RevPAR picking up mid-week but falling significantly over the weekend, attributed partly to the later end of the school year affecting vacation starts.
Regional Disparities Highlighted The West South Central region, including Texas, Louisiana, and Arkansas, underperformed significantly, with an average RevPAR decline of 11.6%. Factors such as adverse weather, ongoing renovations at major convention centers, and shifts in conference schedules contributed to this downturn, which was a major contributor to the national RevPAR decline.
Chain Scale Performance Divergence Across all chain scales, only luxury hotels continued to see gains in RevPAR for the eighth consecutive week, despite experiencing a downturn over the weekend. Economy hotels faced the steepest declines. The overall negative trend across chain scales during the weekend further emphasizes the impact of the delayed school holiday schedule on hotel bookings.
Group and Transient Demand Dynamics Group demand in luxury and upper upscale hotels showed some resilience during the weekdays but dipped over the weekend. Transient demand decreased during the weekdays but saw a slight uptick over the weekend. Shifts in the conference calendar, such as the relocation of the NAFSA conference from New Orleans to San Diego, significantly impacted group occupancy rates in these cities.
Global Market Resilience, except for China Internationally, the hotel industry outside the U.S. saw a 6.6% increase in RevPAR, driven by a rise in average daily rate (ADR). However, due to decreased occupancy and ADR, China bucked the trend with significant declines across its major markets. Countries like Japan and Mexico continued to perform well, contributing to the overall positive global hotel industry performance.
Outlook and Projections Despite a softer performance in the last week of May, occupancy projections for the upcoming summer months remain strong, though flat for July and August. The global hotel market is expected to maintain robust performance, with China and, to a lesser extent, the United Kingdom and Indonesia facing ongoing challenges.
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