September saw the first Federal Reserve interest rate cut in four years, while hotel performance showed modest growth compared to August. As of September 21, national occupancy rose by 0.5%, ADR by 2.0%, and RevPAR by 2.5%, according to STR.
The gap in growth between the top 25 markets and non-top 25 markets, which had narrowed by August, reappeared in early September. The top 25 markets contributed 60% of weekly occupancy gains, while 84% of weekend room night growth came from non-top 25 markets. RevPAR grew across all chain scales except economy hotels, which fell 0.4%. Upper upscale hotels saw a 2.9% ADR increase, while midscale rose by 1.3%.
Group demand for luxury and upscale hotels surged 3.7% year over year, the highest since 2019.
Despite this growth, rising costs, including insurance and property taxes, continue to squeeze hotel profitability. Decreased supply of new hotel rooms helps offset demand pressures, but rising operating costs remain a significant challenge for the industry. Consumers and companies are responding with more conservative travel habits, influenced by post-pandemic price increases.
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Market Expert
- TX 647016
