Executive Summary

  • The hotel sector posted another quarter of strong gains in Q3 compared with a year ago when leisure travel was just beginning to pick up after the COVID-19 shutdown. Demand increased by 37.3%, occupancy gained 35.1%, revenue per available room (RevPAR) jumped 89.7% and the average daily rate (ADR) grew by 40.4%.
  • Compared with Q3 2019—a more relevant pre-pandemic benchmark—demand was 8.8% less, occupancy was down by 11.5% and RevPAR declined by 8.8%. Conversely, ADR grew 3.0%, fueled by strong leisure travel demand over the summer.
  • Approximately 3.8% of luxury hotel properties remained closed at the end of Q3, down from 13.9% at the end of Q1 and from a peak closure rate of 53% in April 2020. As additional higher-priced hotels reopen, overall ADR growth should accelerate. The closure rate of all hotel properties stood at just 2.5% at the end of Q3 2021, down from 4.4% at the beginning of 2021.
  • The top 10 performing markets in Q3 were all in the South, the majority of which were resort destinations with average RevPAR growth of 13% compared with Q3 2019. The weakest 10 markets were all Northern urban destinations, where average RevPAR was down by more than 44% relative to 2019.
  • Resort, interstate and small-town hotel RevPARsmet or exceeded their Q3 2019 levels, while suburban, airport and urban hotels continued to lag.
  • The relative strength of leisure travel, combined with weakness in corporate and group travel, is leading to shifts in distribution (customer acquisition channels). Property direct, OTA and brand.com channels have recorded the most growth over the course of the pandemic, while group and GDS (corporate) channels have lagged.