Through July 2023, demand is still below 2019 and starting to dip under 2022 occupancy performance. Some markets, like Miami, have been harder hit than others with retreating performance metrics. The reasons there are fewer travelers vary. The most common assumption is that many American travelers are venturing internationally while the U.S. dollar is strong and most international markets have re-opened for tourists. Concerns about airline travel, extreme weather, and tightening financial constraints may also be contributing factors.
What guests are paying to stay in hotels is also beginning to normalize, although Guest Paid ADR in 2023 is slightly above 2022’s historic perfor- mance. The combination of shrinking demand and the Guest Paid ADR plateau are leveling out Guest Paid RevPAR.
Average Length of Stay and Day of Week Performance
The pandemic catalyzed the work-from-home or work-from-anywhere movement, leading to more people taking advantage of the opportunity for blended travel. While other factors certainly are at play, blended travel is the main contributor to trends that include an extended average length of stay and a shift in day of week performance that are likely permanent.
While average length of stay is shrinking slightly, it’s still at an average of 2.1 nights, up from 1.9 in 2019. This roughly translates to 45,000 fewer check-ins per day in the U.S.
The most notable increase in length of stay is in the group category. While this segment overall hasn’t fully recovered to 2019 performance levels, trends indicate group travelers are staying longer. This could be the result of blended travel: guests taking advantage of a group rate for a shoulder night to enjoy the destination, or groups booking multiday meetings to make the most of their time as they come together from their remote offices.
In August 2023, group and events data provider Knowland reported 70% of meetings had 200 attendees or fewer, with a year-over-year increase of 40% in meetings with 1-25 attendees. This data supports the suggestion that this group travel segment is small-to-medium sized businesses hosting training, education, or planning confer- ences for their teams. For this specific meeting segment – less than 200 attendees – Knowland conducted a research study with a large U.S.-based management company and found that one key deciding factor for selecting a meeting location was if it was “Instagrammable.” This further supports the rise and interest in blended travel, ensuring travelers are taking time to explore group destinations while adding nights to their stay.
Extended Stay Remains Strong
Extended stay demand and purpose-built extended stay development was hot before 2020 and demand has exploded since. While this segment also experienced a bit of a cooldown, through July 2023 occupancy growth in the 30+ night length of stay tier was 6.9% above 2019. Stays between 15-29 nights were up 3.6% for the same period, while 7-14 night stays were just leveling out with 2019 performance. Notably, shorter stays between 0-6 nights still lagged behind 2019, down 8.8% in July 2023.
Stays of 30+ nights grew significantly in the pandemic's first years and through 2022, due likely to health and disaster-related travel (nurses, government agencies, etc.). In 2022, many markets experienced a housing crunch and saw a boom of 30+ night stays as guests transitioned between homes.
Sunday Takes Top Occupancy Spot
One phenomenon that has emerged in the recovery era is a significant shift in the day of week pattern. While weekend stays (Friday and Saturday) have been the cornerstone of success and driver of occupancy demand for most markets, shoulder nights (Thursday and Sunday) are now taking over as two of the highest occupancy days of the week.
Many signs that indicate corporate and group travel will continue to return to most markets and all hotel types across the country in 2024. This will help boost occupancy demand for Monday through Wednesday, returning the industry to a bit of familiarity with those stay patterns. However, the trend of extended stays into Thursday or Sunday evenings is likely to continue. This is important to keep in mind as you finalize 2024 plans.
Additionally, while more guests will be traveling, they’ll be less willing to pay higher rates. Consider the value your hotel and destination offer: Is it family friendly? Are there enough activities and opportunities to include multigenerational travel for a multinight stay? What services can you restore or add to ensure work-from-anywhere travelers (and maybe their families) are comfortable and productive?
Looking Ahead
“What will next year look like?” It’s the first question everyone asks this time of year. The next year (and several following) are likely to continue normalizing, with occupancy demand and rate growth leveling out or beginning to dip a bit under 2022 performance (in the case of ADR especially). Markets that experienced an early recovery will combat year-over-year declines until “typical” travel returns to their markets. This will be driven, finally, by a return to familiar corporate and group travel patterns.
2024 is, of course, an election year, not just for president but also for the entire U.S. House of Representatives and one-third of the U.S. Senate. Election years drive interesting trends: Cities hosting party conventions experience a significant increase in demand before and during the convention. Washington D.C. tends to see a slowdown in government-related travel as elected officials head back to their home states or districts to campaign. Non-Congress related government travel should avoid impact from the election year cycle.
Additionally, 2024 is a leap year. That means year-over-year growth will seem unusual in February until we remember that extra day in the calendar. We’ll be keeping a close eye on economic indicators, consumer spending trends, and rising credit card debt, while monitoring our current interest in length of stay, day of week patterns, and potential permanent shifts in segmentation mix.
Once you’ve written the 2024 budgets and drafted your marketing plans, take a look back and make sure you’ve taken all potential impacts to business – positive or negative – into account for your hotel and your market. While this may be our normal, it’s still new and we need to pay careful attention to local trends to remain successful.
