July 15, 2020

As US Top 25 Struggle, Some Markets Shine

While the overall picture for the U.S. hotel industry remains dreary, there are some markets that are outperforming due to their strong leisure-demand drivers.

It’s long been a given for U.S. hotels that performance in the top 25 markets would exceed, usually greatly, that of the rest of the country’s hotels.

That is no longer the case.

Speaking during “Markets on the move,” the third installment of the Hotel Data Conference webinar session, Emile Gourieux, business development executive for STR, said markets outside the U.S. top 25 are now the ones enjoying the revenue-per-available-room premium. STR is parent company of Hotel News Now.

In 2019, top 25 markets saw RevPAR of $116 compared to $73 for all other markets. But for the week ending 27 June, markets outside the top 25 saw RevPAR of $47 compared to $38 for the top 25.

Normal times these are not

Source: STR, © 2020 CoStar Realty Information, Inc.

“It’s amazing how things can change in a matter of months,” he said. “One big reason for the shift in performance is a shift in demand away from urban centers and airports.”

For the week ending 27 June, interstate and small/metro town hotels lead the way in terms of occupancy, both at 50.6%, compared to just 33.8% for urban hotels.

Due to the prevalence of leisure demand, weekend occupancy has significantly outperformed weekends, hitting 57.4% for markets outside the top 25.

“Now with busines travel suffering much more and leisure travel seeing a faster comeback, all other markets’ weekend advantage is just over 12 (percentage) points,” he said.

The common theme among the top-performing markets now seems to be proximity to beaches, Gourieux noted.

Beach destinations draw big weekend crowds

Source: STR, © 2020 CoStar Realty Information, Inc.

Some of those markets, including Panama City, Florida, and Pensacola, Florida, have recently enjoyed Saturdays with more than 90% occupancy.

He said this is a sign of travelers feeling “pent up” and being “so tired of being cooped up.”

There are some new potential signs of worry as COVID-19 numbers spike in various areas of the country, Gourieux said. There are early signs that travelers’ confidence might be waning, which could negatively impact the rebound from the depths seen earlier in the year.

“Over the past three weeks, there might have been some second thoughts among travelers on where they wanted to visit,” he said. “Everyone is eager to get out of the house, but with new spikes in COVID cases, it gave a lot of travelers pause.”

And indeed, recent Deloitte Consumer Behavior Tracker surveys have shown slight dips in the number of consumers who feel safe saying at hotels and who plan to travel in the next three months.

Confidence shows signs of wavering

Source: Deloitte Consumer Behavior Tracker

“This virus and crisis are far from over,” he said. “And there is still so much we don’t know yet.”

Copyright 2020 CoStar Realty Information, Inc. All rights reserved. From https://www.hotelnewsnow.com. By Sean McCracken.

To view all articles, check out the Internet Travel Monitor Archive

PLAY VIDEO
Play Video