Occupancy at hotels dropped by almost 12% in June compared to last year, ending the month at 62.2% for the Houston market overall. The ongoing effects of the May 2024 derecho buoyed the market into June of last year. Though ADR rose 1.1% to $122 this June, RevPAR showed an 11-point decline to $76 while revenue decreased 11.5% compared to a year ago. Year to date, the market showed occupancy down 4.5% to 61.5% and RevPAR down almost 1% to $77. ADR rose 4% to $124, while demand and revenue declined 5.1% and 1.3%, respectively.
June Submarket Comparison:
- The CBD/Downtown landed at 58.1% in occupancy, down 10.5%, and $207 in rate, down 3.6%. RevPAR sat at $120, down 13.7%, with revenue down 11.6%. Year to date, however, Downtown continues to show growth across all KPIs.
- Occupancy in the Uptown/Greenway Plaza submarket is down by less than 1% at 63.7%. A 2.2% gain in ADR to $169 helped to drive RevPAR growth, which reached $108, up 1.5%.
- The Medical Center/NRG saw strong growth in ADR, lifting 20% to $162. Though demand and occupancy were down, 6.3% and 4.6%, respectively, growth in ADR helped to support gains in RevPAR, up 14.4% to $104, and a 12.4% increase in revenue.
- The Houston Hobby Airport submarket showed ADR at $106, up 15% and RevPAR at $67, up 4.5%. Though occupancy dipped 9.2% to 63.7%, strong rates promoted a nearly 12% increase in revenue.
- Occupancy in the Houston North/Woodlands submarket declined 16.4% to nearly 62% . ADR reached $123, up almost 2%, while RevPAR declined 14.8% to $76.
Behind the Numbers
Hotel demand was split in June, with luxury class hotels showing gains across KPIs, while economy class segments showed sharp declines – this is consistent with U.S. trends. Despite declines across most hotel sizes, hotels with approximately 300-500 rooms showed moderate growth across all key performance indicators. The average daily rate for this hotel size logged a 2.2% gain, while RevPAR and revenue both grew 2.5% over last year.
Transient, or leisure bookings are up in the Downtown/CBD and Uptown/Greenway Plaza submarkets, growing 20.6% and 9%, respectively. This contrasts with other Houston submarkets that showed declines in leisure bookings. Group bookings, especially around Houston airport, showed strong growth, with Houston Hobby Airport/NASA submarket gaining 20.3% in group bookings YOY and George Bush Airport market gaining 13.8%.
What’s Driving the Market
The George R. Brown Convention Center hosted several meetings and conventions in June, including Comicpalooza, a multi-genre convention celebrating comics, anime, gaming and cosplay. Additionally, major concerts held at NRG Stadium drove hotel demand, especially in the Medical Center/NRG and Uptown/Greenway Plaza market. Metallica, held in early June prompted a 40% lift in demand in the Medical Center and generated occupancy at nearly 90%. Morgan Wallen, held over a two-day period in mid-June, combined with Comicpalooza to yield gains in the market. Average occupancy across Downtown, Medical Center and Uptown sat at approximately 87%, and supported double digit YOY occupancy growth. Finally, Beyonce’s two-day Cowboy Carter Tour not only helped support growth in the hotels, but generated significant economic impact to the city, boosting the economy across all major segments of the hospitality sector.
Written by Megan Henson
