“ Higher occupancy and stronger pricing power at the high end are encouraging indicators of resilient U. S. leisure travel.”
recorded a RevPAR decline of 2.1 percent. After multiple quarters of occupancy deceleration and muted rate growth in the limited-service segment, the first-quarter results showed signs of stabilization. Upscale and upper midscale hotels grew RevPAR by three percent, supported by balanced contributions from occupancy gains and increases in average daily rate( ADR).
OCCUPANCY STRENGTHENS AT THE HIGH END Occupancy levels strengthened meaningfully at the upper end of the chain scale, showing positive increases across all classes for the first time in a year. First-quarter occupancy exceeded 60 percent across the four highest classes, with upper-upscale and upscale hotels reaching over 65 percent. These levels point to robust corporate transient and group demand and suggest leisure travel remains resilient. Luxury hotels continued to lead rate growth, with the average luxury room rate reaching $ 422 in the first quarter, up five percent from a year ago and well ahead of inflation. The higher occupancy and stronger pricing power at the high end are good indicators of resilient American leisure travelers.
all chain scales except economy is now at risk to the upside, reflecting the strength of March and the overall first-quarter performance. High-end hotels and their spas are now positioned to outperform the more muted expectations established earlier in the year. n
“ Higher occupancy and stronger pricing power at the high end are encouraging indicators of resilient U. S. leisure travel.”
MARCH EASES EARLIER CONCERNS Uncertainty emerged following the outbreak of the war in Iran, raising questions about demand resilience in March. Those concerns have since eased. U. S. March RevPAR increased 5.9 percent, driven by an especially strong 11.2 percent gain in the luxury segment. Upper-upscale hotels in March exceeded 70 percent occupancy and increased ADR by 3.5 percent, reversing the sub-inflationary growth that had characterized much of the past year.
OUTLOOK IMPROVES FOR COMING QUARTERS Looking ahead, first-quarter results provide industry participants with improved visibility and optimism for the coming quarters. With occupancy and ADR changes in the final three quarters of last year either negative or only marginally positive, upcoming comparisons are much easier and should support continued growth. The RevPAR outlook for
JAN D. FREITAG is the national director, hospitality analytics, for the CoStar Group. A sought-after public speaker, Freitag comments on the trends that shape the U. S. hotel industry and is frequently quoted in trade publications and the general news media. He is a trusted source of timely insights for investors, owners and operators. He holds a bachelor’ s degree, with distinction, from the School of Hotel Administration, Cornell University, and received his Executive MBA, with honors, from Vanderbilt University.
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