NATIONAL
REPORT — U.S. RevPAR decreased 1.3% year-over-year in September ($105.04)
following a robust August, according to a data analysis by STR. The main reason
was the calendar composition of the month, with this September having one less
weekend and an extra Sunday and Monday compared to 2023.
According to
the study, it was anticipated the Jewish observances of Rosh Hashanah and Yom
Kippur shifting from September 2023 to October 2024 would lift performance
comparisons. While there was some benefit on the group side, it was not enough
to offset the impact of one less weekend. Even though overall September room
demand was down, STR said group room demand among the luxury and upper upscale
segments did exceed pre-COVID numbers from 2019.
The RevPAR
decline was caused by a drop in occupancy (64.6%, down 2.5%) that an increase
in ADR ($162.63, up 1.2%) could not make up. Weekday (Monday-Wednesday) RevPAR
increased by 2.6% due to ADR increasing by +3.1) while shoulder (Sunday and
Thursday) and weekend RevPAR decreased on falling occupancy, although ADR
increased by 1.2%.
If you
combine August and September numbers, RevPAR increased by 1.4% because ADR was
up by 1.8% despite the fall in occupancy. Demand was flat compared to the same
two months in 2023, with supply rising 0.5%.
The luxury
and upper upscale chain scales saw positive RevPAR comparisons lifted almost
exclusively by ADR (luxury hotels also saw an occupancy increase). Growth in
those chain scales was almost exclusively because of the top 25 markets (though
luxury saw growth in and out of the top 25 markets).
This was the
second straight month for luxury RevPAR following a year and a half of negative
RevPAR. RevPAR in the other chain scales fell because of sharper occupancy
losses. For the third quarter, luxury and upper upscale RevPAR increased more
than 2%, followed by upscale (+1.3%) and upper midscale (+0.4%). Midscale
RevPAR decreased by 0.4%, and the economy fell by 2.4%, reflecting the
industry's continued bifurcation.
Top 25
drives growth
STR said, as
has been the case for most of the year, the top 25 markets outperformed the
rest of the industry, with RevPAR up 1.2% on increased ADR (+2.8%). The
remaining markets saw a RevPAR decline (-3.2%) because of declining occupancy
(-3%).
Of the top
25 markets, Houston saw the largest gains (+13.3%), followed by Chicago (+10%)
and Anaheim (+7.1%) New York
City's RevPAR was up 5.4% in September, and the city also had the highest
absolute RevPAR ($363), which was lifted by the United Nations General Assembly
meeting.
Houston has
seen five consecutive months of strong RevPAR growth, which has been driven by
a busy events calendar, recovery/rebuilding efforts following widespread
flooding in May and July and a strong energy industry. But even with the
double-digit growth, Houston still had the lowest absolute RevPAR ($77) of the
top 25 markets.
In terms of
pipeline, STR said the number of rooms under construction increased 7%
year-over-year, the seventh consecutive monthly increase.
STR said
10,200 more rooms are under construction today than a year ago, with the
largest increase in midscale (3,800) and unaffiliated (3,300). At the same
time, the number of rooms under construction in the upper midscale decreased by
nearly 2,000.
Rooms in the
planning phases continue to rise, with rooms in the final planning stages up by
10.4% and rooms in the planning stage up by 38.4%. More than 761,648 rooms and
6,412 hotels are in the pipeline, up 20.4% from 2023. Upscale and upper
midscale chains continue to lead in construction, accounting for nearly half
the rooms in the pipeline.