Hotels across the U.S. experienced their slowest Memorial Day weekend in six years, recording their lowest occupancy rates since the onset of the pandemic in 2020, but they bounced back almost immediately in the days that followed.
Occupancy was just 71.1% from Friday to Sunday of Memorial Day weekend, with demand 1% weaker year-over-year, CoStar News reported. But revenue per available room and average daily rates rebounded in the days that followed, likely boosted by an increase in business travel and several high-profile entertainment events.
The data indicates that the hospitality real estate sector’s current trend — a bifurcation of hotel performance amid a K-shaped economy, with luxury hotels continuing to experience growth while budget travelers cut back on hotel spending — remains dominant.
Luxury and upper-upscale hotels were the only hotel groups with positive growth over the unofficial first weekend of summer, recording a 6.5% year-over-year increase in ADR, CoStar News reported. That rate growth boosted the sector’s overall ADR, pushing RevPAR up by 2.4% year-over-year.
Branded economy hotels, meanwhile, have seen declining demand for the past six weeks. Memorial Day weekend was the largest dip during those weeks, making up approximately 23% of the weekend’s diminished demand.
Part of the decline in performance over the weekend may have been linked to 5% fewer public school students being on summer break during Memorial Day weekend than the year prior, CoStar reported.
After the weekend, however, year-over-year performance swelled. Between Monday and Thursday, RevPAR shot up by 8.1%, and ADR grew by 4.5%, indicating increased business travel.
While demand for luxury and upper-upscale hotels once again led the charge with a 4.7% increase, demand across the top 25 markets measured by CoStar increased by 3.8%, 3 percentage points higher than demand during the holiday weekend.
Despite concerns that spiking oil prices and economic uncertainty could upend hotel performances this summer, travelers are still willing to splurge for big entertainment events, according to CoStar.
Several such events boosted full-weekend performances in some markets in the week after Memorial Day. The week marked the first time since April that every hotel class saw RevPAR growth, with nine of CoStar’s top 25 markets seeing double-digit RevPAR growth.
K-pop sensation BTS and the Jonas Brothers likely added to demand in Las Vegas’ full-week performance, where RevPAR grew by 33.6%. Additionally, Morgan Wallen’s Denver shows partially overlapped with cultural event Fan Expo and festival Outside Days, resulting in a 32% RevPAR increase in the market and occupancy rates between 91% and 94% during the weekend.
