US hotels saw volatile RevPAR trends in February, driven by seasonal shifts, major events, and disaster recovery, with top markets outperforming smaller cities.

The U.S. hotel industry has experienced dramatic fluctuations over the past two months, with revenue per available room (RevPAR) shifting significantly week by week.

For the week of February 16-22, RevPAR saw a slight dip of 0.3%, following a 3.4% jump the previous week, a 2.8% drop before that, and a 4% surge three weeks ago. The driving forces behind these fluctuations include seasonal calendar shifts, the Super Bowl effect, and the ongoing recovery from recent natural disasters such as the Los Angeles wildfires and hurricanes Helene and Milton.

While these factors began to wane in impact this week, it remains uncertain whether this marks the beginning of a longer-term trend or just a temporary stabilization.

Hurricane-Affected Regions and Los Angeles See Strong Performance

Hotels in the 13 Southeast U.S. markets impacted by hurricanes saw RevPAR climb 5.1%, marking the lowest post-storm increase since Helene and Milton struck last fall. Despite the slowdown, these markets have enjoyed double-digit growth in 20 out of the past 22 weeks, though signs indicate a gradual decline in momentum.

Meanwhile, Los Angeles submarkets—Pasadena/Glendale/Burbank, L.A. North, and L.A. East—maintained their surge in hotel demand, with RevPAR soaring 24.2% due to lingering recovery efforts from wildfires. The broader L.A. market also performed well, registering an 8.7% increase in RevPAR.

Key highlights:

• Hollywood/Beverly Hills hotels, which had been struggling with negative RevPAR comparisons since the fires, rebounded with a 9.5% increase.
• The Los Angeles Central Business District saw an astonishing 47% jump in RevPAR, largely due to the 30th annual LA Art Show, which took place a week later than usual.

In contrast, Las Vegas experienced a decline in RevPAR, primarily due to a shift in the city’s conference calendar. As Las Vegas accounts for roughly 3% of the nation’s total hotel supply, any significant market movements here have a notable influence on national performance.

Mixed Performance in Major and Secondary Markets

Excluding Las Vegas, Los Angeles, Orange County, and Tampa Bay, the top 25 U.S. hotel markets recorded a 2.1% RevPAR increase. However, secondary markets—those outside the top 25 and excluding hurricane-impacted and wildfire-affected areas—saw a 1.8% decline.

This widening gap between top-tier and secondary markets has persisted, with RevPAR fluctuations in smaller markets ranging from a 1.7% gain to a 1.3% decline over the past four weeks. In 2024, these areas posted only a 0.9% RevPAR increase for the entire year. With the spring and peak summer travel seasons approaching, the performance of these markets will be a critical indicator for the broader industry, as they represent over 60% of total U.S. hotels.

Holiday Impact on Hotel Demand

Presidents’ Day weekend provided a boost, with RevPAR rising 3% year over year on Sunday, February 16, and Monday, February 17. The uplift was driven by Valentine’s Day falling on a Friday, a trend that historically drives increased hotel demand. However, after the holiday weekend, RevPAR saw a steady decline, ending the week down nearly 3%.

Group vs. Transient Travel Trends

• Group Travel: Luxury and upper-upscale hotels saw a minor 0.8% drop in group demand, but average daily rates (ADR) increased by 4%. The top 25 hotel markets performed well, with group demand rising 2.3% and ADR increasing 3.9%. Markets such as Philadelphia, Los Angeles, Boston, and Nashville led the gains. However, outside these major markets, group demand slipped 4.2%, even as ADR grew by 3.8%.
• Transient Travel: The trend was reversed, with transient demand decreasing by 2.3% in the top 25 markets, while ADR grew by 2%. In contrast, smaller markets saw transient demand surge 5.4%, accompanied by a 4.5% ADR increase.

Luxury Hotels Outperform as Economy Segment Lags

RevPAR performance varied widely across hotel categories:

• Luxury hotels led the way, posting a 7.2% increase.
• Upper-upscale hotels remained flat.
• Midscale and economy hotels struggled, with RevPAR declines of 2.6% and 2.1%, respectively.

Hurricane recovery efforts continued to bolster performance in the lower-tier segments. When excluding hurricane-impacted markets, RevPAR disparities became even more evident, with luxury hotels experiencing a 7.8% increase and economy hotels seeing a 3.7% drop.

Looking Ahead: Easter, Passover, and Spring Travel

Forward bookings for the week ending March 1 suggest a stronger March performance compared to 2024. This year, Easter falls in April rather than March, aligning more closely with Passover. This scheduling shift is expected to drive stronger group and conference travel, as event planners will have only one holiday week to navigate instead of two.

Global Hotel Market Trends: China and the Middle East

• China’s Hotel Recovery: Global hotel occupancy, excluding the U.S., rose to 67.4%, with China leading the way. Chinese hotel occupancy surged by 11.8 percentage points following the New Year holiday, though ADR dropped 8.1%. Major cities such as Shanghai saw double-digit RevPAR increases, driven primarily by rising occupancy.
• Middle East Prepares for Ramadan: The Middle East saw robust RevPAR gains ahead of Ramadan, which begins on February 28. The region’s five largest hotel markets—UAE, Saudi Arabia, Qatar, Oman, and Jordan—recorded RevPAR growth between 6% (Qatar) and 28% (UAE), with occupancy averaging an impressive 82.7%.

As Easter and Passover approach, European and U.K. hotel markets are also poised to benefit from increased travel, while the Middle East is expected to experience a seasonal slowdown due to Ramadan. Meanwhile, China remains a wildcard, with its hotel recovery trajectory dependent on economic conditions and travel demand in the coming months.

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