Carter Wilson, STR’s SVP of consulting and analytics, dives into the latest weekly performance data for the U.S. hotel industry.
Revenue per available room and occupancy continue to trouble the hotel industry, but recent data shows U.S. hotel performance is slowly improving week by week.
U.S. hotel performance data for the week ending 13 June shows that revenue per available room declined year-over-year by nearly 63%, an improvement from the 65% decline the week before, said Carter Wilson, SVP of consulting and analytics at STR, in a new video on weekly performance. STR is the parent company of Hotel News Now.
“As states reopen more and more, and we lean into the summer months, travelers are venturing out, mostly by road rather than by air,” he said.
The data also suggests a weakening relationship between running seven-day RevPAR change and the percent change of new COVID-19 cases, he said. Cumulative new cases of the virus increased slightly last week, and that might be because of expanding testing as well as some emerging hotspots in several states.
“Despite this, RevPAR continues to slowly rise, though there may very well be a delayed impact that will emerge in the data over the next few weeks,” he said.
The slow build of hotel occupancy and airport passenger counts from the TSA are positive signs for the travel industry, he said. The total number of hotel rooms sold in the U.S. in the past week is slightly more than half of the amount sold for the same week last year.
A broader look at the global industry shows hotel occupancy in Europe surpassing 20%, while U.S. occupancy is above 40% and occupancy in China reaches 50%, Wilson said. Despite moderate increases recently, every region is still well-below typical levels.
Breaking down occupancy by class in the U.S., there is still strong demand in the economy segment while the big-box, upper-upscale hotels that rely on group business are still struggling, he said.
For some perspective, Wilson said prior to 2019, the single greatest monthly decline in RevPAR on record at STR was the 23% year-over-year drop in September 2001. The worst performance in 2009 was a 20% decrease in May.
“Now we are seeing monthly declines two to four times the previous worst figures,” he said. “Clearly, the hotel industry has a long road to recovery.”
Anecdotally, walk-in traffic at hotels is substantially higher than normal, Wilson said. He believes this might be where the concept of emotional pricing comes into play.
“Is it easier to discount a rate because somebody is standing right in front of you rather than them having booked the hotel online or through a reservation system?” he asked. “Maybe, maybe not, but I think pricing is going to be a continuous issue as hotel demand slowly recovers in the U.S., and it will be interesting to see what the (average daily rate) recovery time is like for this downturn compared to the last one.”
Copyright 2020 CoStar Realty Information Inc. All rights reserved. From https://www.hotelnewsnow.com. By Bryan Wroten.