Houston hotel performance has mirrored markets across the nation, with significant drops in occupancy and average daily rate (ADR) in March and April across all segments, according to the latest market spotlight from Kalibri Labs released on June 9. Kalibri Labs analyzed Houston hotel performance in 2020, along with what recovery may look like for the market.
Year-to-date (YTD) occupancy for Houston hotels was 38.6 percent as of May 29, 2020—down 40.19 percent year-over-year (YOY). Guest-paid ADR came in at $107.70 (down 10.57 percent YOY), and guest-paid revenue per available room (RevPAR) was $41.60 (down 46.52 percent YOY). Kalibri Labs reported that booking costs per room night were down 14.90 percent YOY to $7.72.
Performance varied across hotel pricing tiers. Lower-tier hotels experienced the smallest impact on occupancy and guest-paid ADR in the first months of the crisis. As Texas began to ease restrictions and open up in May, middle-tier hotels outperformed upper- and lower-tier properties.
Corporate travel, particularly for oil-related business, is a significant demand driver for Houston hotels, as is group business to some extent. Kalibri Labs noted that Houston “could be a barometer market on the return of corporate business.” Even as the state opens up, restrictions on large gatherings and corporate travel policies will continue to dampen recovery for markets reliant on those demand drivers. Markets with drive-to local or regional demand may have a quicker recovery, Kalibri Labs noted. Houston’s location near the Gulf of Mexico could spell more leisure travel for the market. Recovery—or a return to 2019 levels—for Houston hotels could also be tied to rebound in the oil industry, Kalibri Labs reported.
The Houston market stood out from the other top 25 markets in property-direct bookings. More than a quarter of all bookings were direct, “implying that ‘drive-to’ business is a significant source of lodging demand for Houston hotels,” Kalibri Labs noted.
Read Kalibri Labs’ Market Spotlight on Houston here.