Hotel Industry Growth Slows in Q2

Executive Summary

• Hotel fundamentals softened in Q2, largely due to a 1.5% year-over-year drop in occupancy. The average daily rate (ADR) increased by 2.6% year-over-year, its slowest annual growth since Q1 2021. Revenue per available room (RevPAR) increased by just 1.1% year-over-year, a material slowdown from Q1's 15.9% pace.
• Total inbound foreign visitors were 27% below pre-pandemic 2019 levels, while the number of Americans traveling to Europe and the Caribbean increased by 5% and 8%, respectively.
• Hotel wage growth slowed in June but at 5.2% outpaced the national average of 4.7%. Hotel wage growth pressures are likely to persist, at least for the near term.
• Leisure markets remained the strongest RevPAR performers relative to 2019; however, Q2 RevPAR declined from last year in several of them, including West Palm Beach, Savannah, Phoenix and St. Petersburg.
• Occupancy rates for all location types were below 2019 levels in Q2. Urban locations were the only category to post year-over-year gains, with the other five location types contracting vs Q2 2022.