Houston hotel occupancy showed a decline in May, dropping 8.6% compared to the previous year when a powerful derecho led to widespread power outages in the area and a surge in business at local hotels. This May occupancy came in at 61.4% but ADR remains strong, growing 2.9% YOY to $122. However, weakening demand in the overall market produced a dip in revenue by 6.7% and RevPAR by 6% to $75.
Year to date, occupancy is still down 2.8%, however, rate grew 4.6% to $125, while RevPAR ticked up 1.6% to $77 and revenue increased a modest 1%.
May Submarket Comparison:
- The CBD/Downtown submarket maintained steady growth in May, with only a 0.1% dip in occupancy at 63.3%, but a 0.5% gain in rate to $212. Demand was up 2.4%, while RevPAR increased 0.5% to $134 and revenue gained 2.9% YOY.
- Occupancy dropped in the Uptown/Greenway Plaza submarket, down 5% to 64.7%. ADR gained 1.5% to $183, but RevPAR lost 3.6% YOY to $118. Demand and revenue lost 11.5% and 10.2%, respectively.
- The Medical Center/NRG submarket lost 7.3% YOY in occupancy to 62.2%. ADR sat at $153, up 6.4%, while demand lost 9%. RevPAR hit $95, down 1.4%, while revenue decreased 3.2%.
- The Houston George Bush Airport submarket lost 13.5% YOY in occupancy to 62.5% due to a 15.4% dip in demand in May. ADR lost 3.7% to $88, while RevPAR sat at $55, down 16.7%.
- Occupancy in the Katy Freeway West submarket sat at 62.8%, down 12.3%. ADR lost 1.8% to $106, while RevPAR and revenue declined 13.9% and 14.1%, respectively.
Behind the Numbers
The Downtown/CBD submarket showed gains in transient and contract bookings in May, up 4.3% in transient, or leisure, travelers and 4.7% in contract travel (such as airline personnel). Group bookings are up significantly in the Houston George Bush Airport submarket, gaining 31.5% over last May, while the Medical Center/NRG submarket showed a 10.3% YOY boost in committed group bookings.
Occupancy was down across all hotel class segments and hotel sizes in May, with the largest loss shown in smaller hotels with under 75 rooms, down 13.3%; followed closely by economy class hotels, down 12.9% YOY. Though demand is weakening in the market overall, large hotels with over 500 rooms still showed gains in rate and rooms sold in May, supporting a year-over-year revenue gain of 6.8%.
What’s Driving the Market
Year over year demand declines can be attributed, in part, to inflated demand last May from the derecho. In addition to displaced locals, contractors who came into the market to support recovery drove occupancy rates above their typical values last year, giving the appearance of major declines this May. When comparing this year’s KPIs to a more typical year, like 2023, however, the market is following a growth trend.
Major events like OTC in early May helped to drive growth Downtown. Additional events held at the George R. Brown Convention Center in May included DreamCon, a premier entertainment convention uniting gaming, anime, sports and more, which was previously hosted in Austin; and XPonential, a conference for the Association of Uncrewed Vehicles held mid-month.
Written by Megan Henson
Pictured: The Moran, City Centre
