Highlights
Down week, flat weekend in the U.S.
Event shifts impact many Top 25 Markets
U.S. border hotels mostly trending downward
Rest of globe doing well
Lackluster week due to conference shifts and later spring break
The U.S. hotel industry stepped back in the week ending 15 March 2025 as revenue per available room (RevPAR) dropped 4.2% year over year. The decline was almost entirely due to occupancy, which fell 2.3 percentage point (ppts), while average daily rate (ADR) decreased a modest 0.7%. Occupancy has decreased in 13 of the past 14 days with 15 March the only day with an increase. A similar pattern was seen in the same two weeks last year although the two-week decrease is a percentage point less this year as ADR comps have been slightly positive.
Taking the biggest hit were the two shoulder days (Sunday and Thursday), when RevPAR fell more than 7%. Weekdays (Monday – Wednesday) were only slightly less negative (-4.9%). The weekend was almost flat (-0.2%) with Friday’s RevPAR decline (-2.5%) almost erased by Saturday’s increase (+2.0%). This pattern was more pronounced for shoulder and weekends in the Top 25 Markets with shoulder days down 10.4% and the weekend up 0.8%. The decrease in Top 25 weekday RevPAR was similar to the industry average.
We do not attribute the sharp decrease to a lone factor. There were several conference calendar shifts across the Top 25 Markets. In addition, spring break is later for K-12 students and families due to the later start of school after the winter holidays and the year-over-year shift in the Easter calendar. A year ago, a quarter of all K-12 schools were on Spring Break based on STR’s School Breaks Report. This year, only 14% were on holiday. The largest percentage of schools (24%) are on break during the week ending 22 March and the week of Easter (20%). We also noted that holidays were more spread out this year than last year between the two months. Last year, more than 91% of students had completed their spring break by the week ending 6 April. This year, only 64% will have done so.
Hotels were not alone in seeing a decrease in demand as TSA screening volumes were down 0.9% compared to last year. Adding credence to the later Spring Break hypothesis, air travel has been down the past three weeks.
We also can not underestimate the impact of increased uncertainty on consumers. Falling consumer sentiment was highlighted in a recent statement from Federal Reserve Chairman, Jerome Powell. This headwind could impact hotels as they head into the peak leisure travel season.
Conferences and events impact markets in both directions
Houston, with its annual Rodeo, posted a double-digit RevPAR gain (+16%), as did San Francisco (+10.6%), which hosted the CROI healthcare conference. High performing weekend Top 25 Markets included Boston and St. Louis, celebrating St. Patrick’s Day with some of the largest parades in the country. Weekend RevPAR increased 32.8% in Boston and 21.2% in St. Louis. The latter also benefitted from strong group demand.
On the flip side, Anaheim (Orange County) saw a significant decrease due to the calendar shift of the Natural Products conference that took place last week. Three other markets recorded significant RevPAR declines due to event shifts, including Seattle, which held the Aerospace & Defense Suppliers Summit (A&DSS) earlier this month. Other notable decreases occurred in Minneapolis and Orlando. The former held the Big 10 Women’s Basketball Championship last year, and the latter saw the Gartner Data and Analytics conference move into the first part of the month.
Declining occupancy produced negative chain scale RevPAR across the board
The sharpest declines were seen in the middle four tiers with Upscale hotels posting the largest RevPAR drop (-5.2%) and the other three ranging from -4.2% to -4.4%. Occupancy was the primary driver of the decline across all chain scales. RevPAR in Luxury hotels was only slightly negative (-0.6%) lifted by strong ADR gains. Economy hotels reported the second smallest RevPAR decline at -2.7%. Economy hotels continued to benefit from hotels in the 13 markets impacted by last year’s hurricanes. Excluding those markets, RevPAR in Economy hotels was down 4.4%. The same is true for Midscale hotels, but to a lesser extent.
Non-Top 25 Markets responsible for a group demand slowdown, while Top 25 caused the transient slowdown
Group demand in Luxury and Upper Upscale hotels decreased for the second consecutive week, down 1.7%, while ADR rose 3.7%. Markets outside the Top 25 drove the decline, falling 1.5% while the Top 25 Markets saw group demand increase 1.4%. ADR was healthy in the Top 25 Markets, increasing 5.7%, while the rest of the country saw ADR increase 2.3%. Detroit, New Orleans, St Louis, San Francisco, and Philadelphia all saw robust group performance with demand up over 20% along with strong ADR gains for all except New Orleans.
Transient demand and ADR declined 3.8% and 1.4%, respectively. The Top 25 Markets saw a larger decline (-5.8%) versus the remainder of the country (-3.6%). ADR decreases were more modest at -1.7% and -1.3%, respectively. Only three of the Top 25 Markets saw strong transient demand: Houston (+19.9%), Nashville (+6.5%) and Dallas (+5.8%).
U.S. border flows
Over the past week there has been a more pronounced demand decline across hotels on both the Canadian and Mexico borders. A similar decline was seen over the past two weeks, however the most week was the sharpest since we began monitoring those hotels.
Of the 1,306 hotels within 50 miles of the Canadian border, demand was down 4.8%. The prior two weeks were down 1.9% and 2.6%. Demand across the U.S. was also down this week but not as much as seen in U.S. hotels near the Canadian border.
Of the 916 hotels within 50 miles of the Mexican border, demand was down 3% this week. The prior two weeks saw the measure fall 4.2% and 0.3%, respectively.
Note, we are not attributing these decreases in demand solely to any U.S. policy changes. Some border towns are seeing increases in demand due to the deployment of officers and troops. We will continue to monitor these hotels in the weeks and months to come.
Global occupancy continues to slow while ADR remains strong
Global occupancy, excluding the U.S., fell 1.2ppts compared to last year with the measure at 64.1%. ADR rose 5.3%, netting a RevPAR gain of 3.3%, the highest gain of the past three weeks. The occupancy day-of-week pattern followed the U.S. with the weakest performance during the shoulder period (-2ppts) followed by weekdays (-1ppts) and weekends (-0.7ppts). ADR was up across all days with the strongest gain seen in shoulder days.
Occupancy was down in each of the 10 largest countries (ranked based on supply). Mexico (+23.9%) and Japan (+21.5%) continued to see the largest gains, all due to ADR (+23.0%).
Eight of the 14 STR-defined markets in Mexico increased RevPAR, led by strong growth (30%+) in the Mexican Caribbean, Cancun and Baja California. Nine of the 11 markets in Japan posted RevPAR increases led by Tokyo, where the measure was up 41.5% on an ADR gain of 37.6%. All but one Japanese market saw ADR rise, with most seeing double-digit gains.
Only four of the largest countries saw RevPAR increase this week. Indonesia (+1.9%) and France (+0.3%) accompanied Mexico and Japan, but their gains paled in comparison. Indonesia’s gain was driven by ADR as occupancy dropped. This reflects a shift in the mix of travelers, which is due in part to Ramadan when many Muslim visitors refrain from traveling.
The top European countries all posted RevPAR declines, impacted in part by a shift in spring holidays. Canada was also down (-2.5%) due to falling occupancy as ADR was up. India (-5.9%) and China (10.9%) saw the largest weekly RevPAR decreases.
Springing ahead?
With spring starting, hotels will have to be patient for the season to bloom, assuming consumers do not wither away. Forward STAR data shows U.S. occupancy on the books improving significantly next week, followed by a decline during the Easter week, due to falling group and business travel. The later spring break will increase leisure travel, while business and group travel may slow. All to say that the next few weeks are predicted to be a bit choppy. Globally, ADR is expected to continue to increase while occupancy flattens.
*Analysis by Isaac Collazo, Chris Klauda.
*All financial figures in U.S. dollar constant currency.
About CoStar Group, Inc.
CoStar Group (NASDAQ: CSGP) is a leading provider of online real estate marketplaces, information, and analytics in the property markets. Founded in 1987, CoStar Group conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of real estate information. CoStar is the global leader in commercial real estate information, analytics, and news, enabling clients to analyze, interpret and gain unmatched insight on property values, market conditions and availabilities. Apartments.com is the leading online marketplace for renters seeking great apartment homes, providing property managers and owners a proven platform for marketing their properties. LoopNet is the most heavily trafficked online commercial real estate marketplace with thirteen million average monthly global unique visitors. STR provides premium data benchmarking, analytics, and marketplace insights for the global hospitality industry. Ten-X offers a leading platform for conducting commercial real estate online auctions and negotiated bids. Homes.com is the fastest growing online residential marketplace that connects agents, buyers, and sellers. OnTheMarket is a leading residential property portal in the United Kingdom. BureauxLocaux is one of the largest specialized property portals for buying and leasing commercial real estate in France. Business Immo is France’s leading commercial real estate news service. Thomas Daily is Germany’s largest online data pool in the real estate industry. Belbex is the premier source of commercial space available to let and for sale in Spain. CoStar Group’s websites attracted over 163 million average monthly unique visitors in the third quarter of 2024. Headquartered in Washington, DC, CoStar Group maintains offices throughout the U.S., Europe, Canada, and Asia. From time to time, we plan to utilize our corporate website, CoStarGroup.com, as a channel of distribution for material company information. For more information, visit CoStarGroup.com.
This news release includes “forward-looking statements” including, without limitation, statements regarding CoStar’s expectations or beliefs regarding the future. These statements are based upon current beliefs and are subject to many risks and uncertainties that could cause actual results to differ materially from these statements. The following factors, among others, could cause or contribute to such differences: the risk that future media events will not sustain an increase in future occupancy rates. More information about potential factors that could cause results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, those stated in CoStar’s filings from time to time with the Securities and Exchange Commission, including in CoStar’s Annual Report on Form 10-K for the year ended December 31, 2023 and Forms 10-Q for the quarterly periods ended March 31, 2024, June 30, 2024, and September 30, 2023, each of which is filed with the SEC, including in the “Risk Factors” section of those filings, as well as CoStar’s other filings with the SEC available at the SEC’s website (www.sec.gov). All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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