2024 is proving to be a year of growth for Houston. Just past the halfway point of the year, we can reflect on the major progress the region has made in the leisure and hospitality sector, highlighting significant year-on-year gains in hospitality, major events that have driven progress and an increased appetite for dining and travel in Houston.
Hotel Performance
Houston hotel performance has consistently improved in the first half of the year compared to the same period in 2023. Market wide occupancy through June hit 64.5%, up 3.9-points, while ADR increased 3.2% to hit $120. RevPAR (revenue per available room) and Revenue showed considerable gains at 7.2% and 7.7% respectively, driven by gains in demand at 4.4%. Looking Downtown, a robust conference schedule and a series of high-profile sporting events have driven strong performance. ADR hit $227, a 3.4% gain, while RevPAR hit $143, a 5.5% increase. Demand spiked 5.5% year-on-year and Revenue showed an impressive 9-point gain. When compared to Texas’ other large CBDs, the Houston CBD showed the highest year-over-year percent change in RevPAR, almost doubling the growth of its closest competitor, Dallas. The Houston CBD also ranked second in overall ADR, behind Austin.
Visitor Behavior
According to recent geo-location data, a large percentage of domestic visitors to Houston come from other parts of Texas (approximately 61%), followed by Louisiana, Florida and California. Houston sees a substantial portion of visitors from Dallas-Fort Worth, San Antonio, Austin and Beaumont-Port Authur, making up approximately 31% of the total share of domestic visitors in the first half of the year.
Domestic visitors are frequently visiting Upper Kirby/Greenway Plaza, Uptown/Westheimer, the Energy Corridor, Southwest Houston (China Town) and Midtown. According to recent TransUnion credit card data, domestic spend in the region is highest for those visiting from Dallas-Ft Worth, Los Angeles, New York, and Miami-Ft. Lauderdale, with the largest percentage being combined spend on lodging and restaurants/food.
Top international visitor origin markets include Mexico, Canada, Brazil, Japan and the United Kingdom. Houston international visitors’ top points of interest include Bush Intercontinental Airport, Upper Kirby/Greenway Plaza, Uptown/Westheimer, the Energy Corridor, Midtown, Southwest Houston (China Town) and the Washington Avenue Corridor.
Though many visitors are road-tripping to Houston, a large portion of visitors are arriving via air. According to Houston Airport System data, the city’s two passenger airports have seen over 25 million travelers through May, up 5.5% compared to 2023. Approximately 19 million travelers flew through IAH and another 6 million flew through Hobby Airport.
While in Houston, travelers and locals alike are enjoying the Houston food scene, according to data from OpenTable. In the first half of the year, restaurant reservations are up 7.3%, indicating stronger consumer confidence and increased interest in higher end dining compared to last year. Sunday brunch is leading Houston reservations in growth in the first part of 2024, showing a 20.9% increase in reservations, compared to Friday and Saturday’s average 8% increase.
Driving Performance
Major sporting and national events, as well as a series of large-scale conferences, drove visitors to market in 2024. Houston hosted two major sporting events in the first half of 2024: the National College Football Championship in early January and three COPA matches this summer. The football championship resulted in a 95% occupancy rate in the CBD and an average ADR of $448 – this created a 262% gain in revenue over the same week in 2023, and a record ADR compared to comparable events held in Houston. The three COPA matches produced high occupancy rates in the Medical Center/NRG and Uptown/Greenway Plaza submarkets. In addition to sports, the Houston Livestock Show and Rodeo drove hotel performance throughout the Rodeo Cookoff and Rodeo, causing solid increases in occupancy rates and ADR from late February through mid-March.
The George R. Brown Convention Center hosted several city-wide conventions, or conventions with 1,500 or more rooms booked on peak. Some notable meetings include NAPE, hosted in February, where the CBD achieved 95% occupancy, a 20-point lift YOY; the 2024 Commodity Class/National Corn Growers Association conference, hosting almost 7,000 rooms on peak and occupancy ranging between 86%-95%; CERAWeek, which increased year-on-year revenue in the CBD by 109%; and the OTC Conference, which showed double digit percent gains in multiple submarkets, including the CBD, Medical Center/NRG and Uptown/Greenway Plaza. Looking forward to the second half of 2024, the GRB will continue to support strong performance in the market, hosting several conferences that are anticipated to have more than 3,000 room nights booked on peak, including the International Quilt Market and Festival.
Additionally, weather related events, the Derecho and Hurricane Beryl, resulted in uncharacteristic spikes in occupancy over two-week periods, as Houstonians sought lodging due to wide-spread power outages.
Growth in the leisure and hospitality market continues to be integral to the economic success of Houston. As of May 2024, the leisure and hospitality sector accounted for 368,500 jobs, ranking fourth overall in total nonfarm jobs in metro Houston –a 2.2% gain compared to 2023 and a 9% increase from 2019.
Written by Megan Henson
