All financial figures in U.S. dollar constant currency.
Highlights
- RevPAR down in 42% of U.S. markets in four of the past six weeks
- Last year’s Hurricane Debby made for easy comps in the Southeast
- Top 25 Markets down more than national average
- San Francisco remains a bright spot
- Global RevPAR growth continues minus the drag from Olympics comp
RevPAR slows even when removing muddy performance comps
U.S. hotel industry performance was down for the week ending 9 August. Revenue per available room (RevPAR) dipped 1.6% on falling occupancy (-0.7 percentage points) and ADR (-0.6%).
— Source: STR
Muddying the results were 1) the continued negative influence from Houston and Las Vegas as well as 2) the impact of last year’s Hurricane Debby, which impacted select southeast U.S. markets and created gains for those markets this year.
— Source: STR
Houston remained a significant drag on the Top 25 Market results due to difficult comps from last year’s storms. Additionally, Las Vegas continues to hamper the Top 25 average with multiple factors affecting the market. These two markets combine to account for 14% of rooms in the Top 25 and 5% of the total U.S. However, even when excluding these two markets, the decrease in the Top 25 Markets (-2.5%) was nearly double that of the remainder of the U.S.
Hurricane Debby made landfall in the matching week last year in the Big Bend region of Florida with a second landfall in South Carolina, driving away demand in several southeast markets including Augusta, Charleston, Columbia, Fort Myers, Georgia South, Jacksonville, Myrtle Beach, Tampa Bay, Savannah and South Carolina Area. This year, these markets saw demand return to normal, resulting in double-digit RevPAR growth.
Excluding the Debby markets, U.S. RevPAR would still be down, but less so (-1.1%)—that’s true even if you exclude Houston and Las Vegas (-0.2%).
Outlier markets lifted lower chain scales while dampening Luxury
Luxury has been the only chain scale to show consistent gains this entire summer, but RevPAR slowed in the most recent week (-0.1%). As with prior reported weeks, bifurcation continued with RevPAR becoming progressively worse in the lower chain scales, with Economy down 5.7%.
When removing hurricane Debby markets, as well as Houston and Las Vegas, Luxury RevPAR came in at -1.3%, but Economy hotels were less negative at -3.4%. Midscale and Upper Midscale improved by just under a percentage point while Upscale and Upper Upscale were relatively unchanged.
Fifth consecutive week of group demand decline, most pronounced in the T25
Luxury and Upper Upscale hotel group demand declined for the fifth consecutive week, falling 6.2% in the most recent period. Group demand in the Top 25 Markets was down 9.6%.
Even when excluding Las Vegas and Houston, Group demand was down. Non-Top 25 markets also declined (-1.2%) but less so than the larger markets. Group ADR remained healthy for both the T25 (+3.4%) and non-T25 (+2.1%). In contrast, Transient demand among Luxury-Upper Upscale hotels has been positive most weeks this summer, with 1.9% more rooms sold in the most recent week while ADR dipped 0.8%.
— Source: STR
Top 25 Markets varied with storm impacts evident
Among the Top 25, San Francisco continued to see strong RevPAR growth, up 22.2%. In the prior week, the market was up 33.2%. Both weeks were lifted by the World Transplant Congress. So far this year, San Franciso has posted 23 weeks of RevPAR gains (of 32 total), the most within Top 25 Markets.
Among other T25 leaders, Tampa Bay (+10.2%) and Miami (+8.9%) had favorable YoY storm comps. Dallas (+9.4%) and Detroit (+8.4%) rounded out the best within the Top 25.
On the negative performance side, Houston saw RevPAR retreat 36.4%. New Orleans has struggled to fill rooms all summer with recent occupancy at 49.1% compared to 60% a year ago. NOLA’s weekly RevPAR was down 20.3%.
Las Vegas was down 18.9%.
— Source: STR
Olympic comp pulled down global growth
The Paris Summer Olympics took place last year from 26 July through 11 August. As expected, there was a major impact on global RevPAR comps because of the ADR premium last year. Global RevPAR has declined for the past three weeks, retreating 3.7% this week due entirely to France. The country saw a 61.7% RevPAR decline with ADR down 56.3% and occupancy falling 9.8ppts.
Excluding France, global RevPAR rose 5.6% and has been positive for the past three weeks. In fact, it has been positive for all but three weeks this year. ADR has been the primary driver, increasing 5.5% YTD and 5.6% in the most recent week. Occupancy declined 0.5 ppts this week and is down 0.4ppts YTD.
Japan, Canada and Spain all delivered top RevPAR gains this week following several weeks on top. China RevPAR was down as it has been for the past 13 weeks.
— Source: STR
Looking ahead
Continuing RevPAR deficits remain a concern in the U.S. as summer wraps up. The Top 25 Markets have been hit especially hard even after controlling for atypical comparisons such as storm impacts.
Inflation and operational expenses continue to rise substantially faster than room revenues, which is creating declining profit margins. In the coming weeks and months, we will continue to see challenging year-over-year storm comps. All eyes will be on the fall conference and meeting season after a lackluster Group performance this summer.
Globally, RevPAR has continued to grow (excluding France), and, while slowing, does not appear to be at risk of going negative anytime soon.
About CoStar Group, Inc.
CoStar Group (NASDAQ: CSGP) is a leading provider of online real estate marketplaces, information, and analytics in the property markets. Founded in 1987, CoStar Group conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of real estate information. CoStar is the global leader in commercial real estate information, analytics, and news, enabling clients to analyze, interpret and gain unmatched insight on property values, market conditions and availabilities. Apartments.com is the leading online marketplace for renters seeking great apartment homes, providing property managers and owners a proven platform for marketing their properties. LoopNet is the most heavily trafficked online commercial real estate marketplace with thirteen million average monthly global unique visitors. STR provides premium data benchmarking, analytics, and marketplace insights for the global hospitality industry. Ten-X offers a leading platform for conducting commercial real estate online auctions and negotiated bids. Homes.com is the fastest growing online residential marketplace that connects agents, buyers, and sellers. OnTheMarket is a leading residential property portal in the United Kingdom. BureauxLocaux is one of the largest specialized property portals for buying and leasing commercial real estate in France. Business Immo is France’s leading commercial real estate news service. Thomas Daily is Germany’s largest online data pool in the real estate industry. Belbex is the premier source of commercial space available to let and for sale in Spain. CoStar Group’s websites attracted over 163 million average monthly unique visitors in the third quarter of 2024. Headquartered in Washington, DC, CoStar Group maintains offices throughout the U.S., Europe, Canada, and Asia. From time to time, we plan to utilize our corporate website, CoStarGroup.com, as a channel of distribution for material company information. For more information, visit CoStarGroup.com.
This news release includes “forward-looking statements” including, without limitation, statements regarding CoStar’s expectations or beliefs regarding the future. These statements are based upon current beliefs and are subject to many risks and uncertainties that could cause actual results to differ materially from these statements. The following factors, among others, could cause or contribute to such differences: the risk that future media events will not sustain an increase in future occupancy rates. More information about potential factors that could cause results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, those stated in CoStar’s filings from time to time with the Securities and Exchange Commission, including in CoStar’s Annual Report on Form 10-K for the year ended December 31, 2023 and Forms 10-Q for the quarterly periods ended March 31, 2024, June 30, 2024, and September 30, 2023, each of which is filed with the SEC, including in the “Risk Factors” section of those filings, as well as CoStar’s other filings with the SEC available at the SEC’s website (www.sec.gov). All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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