October 19, 2022

Boutique Hotels Leading US Hotel Industry in Many Metrics

Recovery Remains Strong Despite Supply Growth, Especially in Upscale Lifestyle Hotels

Boutique hotels are performing well in 2022 and all classes show recovery in average rate and revenues, surpassing 2019 peak levels and leading the U.S. hotel industry.

Occupancy has not quite recovered to 2019 levels for the segment and partially the reason is that lifestyle and upper-upscale independent boutique hotels are slightly behind in revenue per available room recovery. Lifestyle hotels also reported very large supply growth through June 2022.

Compared to 2019, the strongest RevPAR increases were in the soft brand collection and independent luxury class due to a spike in average rate. Luxury class hotels across the nation achieved strong RevPAR growth through June 2022 from increased leisure travel.

Key Performance Metrics

Boutique hotel supply — the number of open hotel rooms — was at an all-time peak in 2019, led by the lifestyle, upper-upscale to luxury class hotels.

All boutique hotels declined in supply beginning in April 2020 for 10 months, as hotels closed in response to the pandemic.

Through June 2022, boutique hotel supply surpassed 2019 at an increase of 19%. This is compared to 3.2% supply growth for the entire U.S. hotel industry during the same period.

Supply growth is led by the lifestyle, upscale to upper-midscale class at 48.9%, compared to 7.1% growth for all U.S. upscale hotels and 6.7% for all U.S. upper-midscale hotels.

Boutique Hotel Room Night Supply

After a substantial loss in room revenue from March 2020 through February 2021, boutique hotels recovered strongly through June 2022, surpassing 2019 levels by 20.4%. CoStar hospitality analytics firm STR reports all hotel room revenue was up 7.1% through June 2022 compared to 2019.

Revenue increases vary widely by class groupings and are led by the lifestyle, upscale to upper-midscale class at 41.4%. This is compared to a 4.7% increase in revenue for all U.S. upscale hotels and a 12.3% increase for all upper-midscale hotels.

Boutique Hotel Room Revenue

Following a peak in 2019, demand declined every month from March 2020 through March 2021 due to the impact of the pandemic.

Collectively, boutique hotels increased in demand at a rate of 3.8% through June 2022 compared to the same period in 2019. This is stronger than all U.S. hotels, which reported a decline in demand of 3.4%.

Demand did not recover to 2019 levels for all boutique hotel classes. Soft-brand luxury and independent upper-midscale, upscale and upper-upscale classes all report declines in demand compared to 2019, ranging from down 4% to down 7.7%. U.S. hotels in these classes also reported declines ranging from 1.7% to 13.3%.

Top 50 Markets

In most class groupings, occupancies were at historic peaks in 2019. Through June 2022, boutique hotel occupancies did not recover to 2019 levels, instead declining overall by 12.8%. STR reports a 6.4% decline for all U.S. hotels in occupancy during this period.

Boutique Hotel Room Night Demand

Average rate through June 2022 has surpassed 2019 levels at boutique hotels by 16% and at a pace stronger than all U.S. hotels of 10.9%. Increases are heavily led by soft-brand and independent luxury class hotels at 25.3% and 31.8%, respectively. This is compared to all U.S. luxury hotels at 27%.

Boutique Hotel Occupancy

RevPAR increased above 2019 levels through June 2022 at 1.1% for boutique hotels, and behind all U.S. hotels at 3.9%. Largely due to a lag in occupancy recovery, some boutique classes still show a decline in RevPAR during this period. Independent and soft-brand, luxury hotels achieved the strongest RevPAR growth at 12.9% and 13.3%, respectively. This is compared to all U.S. luxury hotels at 10.1%.

Revenue Per Available Room

Copyright 2022 CoStar Group. All rights reserved. From https://www.costar.com. By Kim Bardoul, HNN contributor.

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