STR: Labor Day weekend boosts occupancy

The effect may be temporary as leisure travel fades

0
1954
Occupancy for the week of Labor Day weekend, ending on Sept. 5, finished at 49.4 percent, up from 48.2 percent the previous week but down 18.9 percent year over year, according to STR. ADR finished at $100.97, a 17.1 percent drop from the previous year, and RevPAR came in at $49.87, down 32.8 percent from last year.

LABOR DAY WEEKEND provided an expected boost to U.S. hotels’ occupancy for the week ending Sept. 5, according to STR. However, now leisure travel is expected to ebb and the question remains what will happen now.

Occupancy for the week finished at 49.4 percent, up from 48.2 percent the previous week but down 18.9 percent year over year. ADR finished at $100.97, a 17.1 percent drop from the previous year, and RevPAR came in at $49.87, down 32.8 percent from last year.

“Hotel demand grew to 18 million room nights sold, up 500,000 week over week,” STR said in its press release. “Saturday, Sept. 5 occupancy came in at 69 percent, just 2.6 percent less than the comparable Saturday in 2019, and leisure markets that have showed the highest summer occupancy levels reported strong increases from the previous weekend.”

The clearest signs of the industry’s gradual recovery is found in the RevPAR percent change data, said Jan Frietag, STR’s senior vice president of lodging insights, in a video deep dive of the data for the week.

“For August we expect that RevPAR comes in at just around minus 47.5 percent compared to August in the prior year. Clearly an uptick and clearly a sign of continued leisure travel,’ Freitag said. “Now, what September and October hold at this point is anybody’s guess. It is possible that with the lack of corporate group demand that the RevPAR changes may get worse. Let’s take a look at this in the coming months.”

The week’s 32.8 percent RevPAR decline over the week is better than what STR has observed for some time, Freitg said.

“It’s basically on par with early March results,” he said.

Also, the number of new COVID-19 cases is well below 300,000 a week.

“It’s going to be interesting to watch what happens now as things get back to a little bit more like normal without the same leisure demand in terms of RevPAR percent change numbers,” he said.

The weekend occupancy rate of 69 percent also is a good sign, Freitag said.

“That’s only 2.6 percent lower than it was on the same Saturday a year ago,” Freitag said. “So this week is probably going to be very, very close to what it used to be a year ago, but again, that is just the Labor Day impact. I am not sure how sustainable that really is.”

Freitag said it was good to see that not only were upper midscale, midscale and economy class hotels seeing occupancy over 50 percent, but also luxury and upper scale, two categories that have suffered the most from the pandemic, saw occupancies near 40 percent. He said that was likely because highly paid “thought workers” who have been stuck at home for some time took advantage of the weekend to travel to more upscale properties.

ADR on transient rooms also received a Labor Day boost.

“The average transient room payment at $184 sounds like a pretty healthy room rate for the Labor Day weekend. Again, not sure how sustainable that is going forward, but again it was nice to see that revenue managers and yield managers who knew that there was going to be some sustained demand took some advantage.”

Comparing the Labor Day week to the week before, ending Aug. 29, markets such as Fort Myers, Florida, and the Florida panhandle saw the highest occupancy rate increases. Fort Myers had the highest increase with a 61 percent increase in the second week, from 50.1 percent to 80.7 percent.  Louisiana North had the highest occupancy with 83 percent.

“All those markets that have leisure drive-to appeal saw very, very high occupancies and saw very strong occupancy increases,” Freitag said. “What is interesting to note, though is that the markets with the highest absolute occupancy were actually not those leisure destinations.”

Louisiana North and South were likely still benefiting from the surge in people left displaced by Hurricane Laura. In California, people are likely being displaced into hotels by the wildfires raging through that state.

The leading markets for rate growth between the week of Aug. 29 and Labor Day weekend include Miami with 11 percent growth, from $112 to $124; New Orleans with 10 percent growth; and San Diego with 8 percent.

“A little bit more leisure driven destinations that saw increases in demand and so therefore some increases in room rates,” he said.

On a global scale, Freitag said summer is over in Europe where occupancy fell to 39.7 percent. An STR analysis found that the slight drop seen in the China market is due to seasonality.

“Seasonality that we have seen historically around this time,” he said. “We interpret that to mean that the China occupancy and the Chinese hotel industry is basically back to normal. They are now seeing seasonal fluctuations again.

Some Chinese hotels also sent STR pictures indicating they were seeing some large group business, a sign that the market was back to almost completely back to normal.