The United States hotel industry is experiencing a strong recovery thanks to a robust convention calendar, with the recent Dreamforce conference in San Francisco playing a significant role in boosting hotel performance. The conference, hosted by Salesforce, unveiled a pivot in its artificial intelligence strategy, showcasing how AI tools can handle tasks without human supervision and changing the way software is charged for.
In the week ending September 21, U.S. hotels saw a 2.5% increase in revenue per available room, with the bulk of the rise coming from an average daily rate increase of 2%. More than 60% of the weekly demand gain in the hotel industry came from the top 25 U.S. hotel markets, where revenue per available room increased by 3.1% due to a slightly higher gain in average daily rate than occupancy. Overall, hotel occupancy in the U.S. increased to 68.9%, surpassing 68% for the first time since early August.
San Francisco saw a substantial increase in revenue per available room, with a 71.6% rise attributed to the hosting of the Dreamforce conference. On the other hand, New York City experienced a decline in revenue per available room, falling by 14.5% due to the shift in the United Nations’ General Assembly “High-level Week.” Excluding San Francisco and New York City, the remaining 23 major U.S. hotel markets saw a strong growth in revenue per available room, reaching 4.2%.
Weekends and weekdays showed varying trends in hotel demand growth. Weekends were led by non-top 25 hotel markets, contributing 84% of the gain in room nights, while weekdays belonged to the top 25 markets, which accounted for 93% of growth. The top 25 markets saw a significant increase in weekday hotel occupancy, reaching 77% with revenue per available room growing by 4.1%.
Across different chain scales, nearly all segments saw an increase in revenue per available room driven by average daily rate. Luxury hotels experienced a revenue per available room increase of 1.5% due to occupancy gains, while upper upscale hotels saw the largest weekday revenue per available room increase at 4.6%.
Group demand for luxury and upscale hotels also saw a rise of 3.7% year over year, reaching the highest level since fall 2019. The conference calendar shift in San Francisco contributed to a significant increase in group occupancy, while a decline was observed in New York City due to the calendar shift of the U.N. General Assembly meeting.
Looking ahead, U.S. hotels are expected to see stronger performance due to the upcoming U.N. General Assembly meeting in New York City. However, the month of September is expected to be weak due to one less weekend compared to last year, with early October also anticipated to be soft as the Rosh Hashana observance begins.
Global hotel performance saw a rise of 5.9% in revenue per available room driven by average daily rate, with occupancy remaining strong at 70.5%. The largest declines were observed in China and Germany due to shifting festival dates, while Mexico continued to see significant average daily rate growth resulting in a 23.2% increase in revenue per available room.
In conclusion, the hotel industry in the United States and globally is showing signs of recovery and growth, with conventions and events playing a crucial role in driving performance. As the industry continues to adapt to changing calendars and events, hotels are expected to see a positive trend in the coming months.