U.S. Hotel Market Continues Broad Recovery

Executive Summary

• Hotel fundamentals improved across the board year-over-year in Q1. Supply growth was essentially flat, while the sector recorded increases of 5.5% in demand, 5.4% in occupancy, 15.5% in revenue per available room (RevPAR) and 9.6% in average daily rate (ADR).
• So far in 2023, total daily airline passenger volume is on par with 2019 levels. An expected strong summer travel season, supported by the return of travelers from Asia, should benefit gateway markets and prime destinations on the West Coast.
• Hotel wage growth of 5.7% in March outpaced the national average of 5.1% and was down from 7.0% at the end of Q4. We expect wage growth will further moderate this year. Average hourly hotel wages lagged the national average by nearly $10.
• Southern markets remained the strongest RevPAR performers relative to 2019. On a year-over-year basis in Q1, RevPAR grew the most in San Francisco, New York and Washington, D.C., which lagged in 2022.
• Occupancy rates for all location types except for “town” were below 2019 levels in Q1. The “town” occupancy rate was a full percentage point above its 2019 level, while urban locations lagged at 91%.
• Total bookings increased nearly 6% year-over-year, driven by increases of 28% in corporate (GDS) and 18% in group reservations.