Holiday Travel Helps Boost Q4 Hotel Market Fundamentals

Executive Summary

• The overall hotel occupancy rate increased by 1.1% year-over-year in Q4 as demand growth of 2.1% outpaced supply growth of 1.0%.
• A 1.2% increase in average daily rate (ADR), coupled with the increase in occupancy, led to a 2.3% increase in revenue per available room (RevPAR). An uptick in hurricane-related demand led to gains in the lower price tiers, while a relatively short Thanksgiving-to-Christmas season, resulting in fewer group event days, led to stronger pricing power. 
• Demand growth for lodging alternatives continued to outpace that for traditional hotels. Short-term rentals and cruise lines saw demand growth of 31% and 14%, respectively, compared with pre-pandemic Q4 2019.
• Given a decline in hotel job openings, hotel wage growth decelerated to 3.0% in Q4 from 3.9% in Q3. Average hourly hotel wages remained nearly $11 below the national average for all workers.
• Occupancy rates for most location types continued to lag those of Q4 2019. Town and interstate locations were the two exceptions, up by 1.3% and 1.6%, respectively, likely due to hurricane-related demand. Suburban locations were the closest to their average 2019 occupancy level at 99.6%.
• Brand.com continued to make inroads at the expense of other distribution channels, increasing its share by 3 percentage points (pps) compared with 2019. Property direct, voice and group channels shares have all declined over the past five years.