Smaller Meetings Driving Improvement in Group Demand
U.S. hotels ended the summer season with another burst of leisure demand, but occupancy was down from August.
According to STR, CoStar Group's hospitality analytics firm, U.S. hotel occupancy was 61.6% in September, down from 63.2% in August. Average daily rates for both months were higher than the same months in 2019, however.
Jan Freitag, national director of hospitality analytics for CoStar Group, said U.S. hotel performance in September was still heavily weighted toward leisure travel. Leisure demand, particularly in the more expensive hotel and resort segments, continues to be strong.
"We see that in the resort occupancies and in the high-end room rates on the weekend," he said. "And leisure demand seems to be price inelastic. What we mean by that is that the urge to go and venture out, ready to spend the savings, is very strong despite prices that are 34% higher than last year."
While leisure demand at U.S. hotels has been consistently strong throughout the summer, corporate demand has not recovered as quickly, Freitag said. The easiest way to compare corporate demand to leisure demand at hotels is to look at rooms sold on Wednesdays and Saturdays, respectively.
"In 2019, Wednesday and Saturday occupancies were fairly close but over the last year, Wednesday occupancies are still lagging," he said. "That, of course, is a direct function of people not having gone back to the office 100% and travel managers keeping a lid on some business trips."
This fall, hoteliers hope group business can replace some of that lost seasonal leisure demand. There are glimmers of hope for that as the U.S. sold 4.8 million group rooms in September, which is 1 million more than August.
"Anecdotally, when we talk to our customers and clients in the field, it seems that that group demand is not driven by citywide conventions but smaller corporate meetings," Freitag said. "Maybe boards of directors or partners meetings, so smaller groups that have not gotten together over the last year and a half feel the need to get together for brainstorming or strategy sessions."
Copyright 2021 CoStar Group. All rights reserved. From https://www.costar.com. By Dan Kubacki, Hotel News Now.