Despite high hopes for a solid holiday weekend performance, the U.S. hotel industry saw its steady recovery progress plateau the week of July 4, according hotel data analytics firm STR.

"We hit the bottom for the industry the week of April 11, and it's been improving ever since, but we actually saw a reversal of that with the week ending July 4," said STR senior consultant Hannah Smith during an Americas Lodging Investment Summit (ALIS) Summer Update webinar event on July 13. "Everyone was projecting a big week for the industry, but we saw this come right as some areas, [including] Texas beach areas and Florida, started to reclose bars and beaches, and that caused a rollback in occupancy in a lot of those markets."

STR data shows the number of U.S. rooms sold the week of July 4 totaled 16.1 million rooms, which was slightly below the number of rooms sold the week prior.

In addition to slowing rebound trends, Smith reported that the economy sector now represents the lion's share of U.S. demand. According to STR, the economy segment accounted for 41% of U.S. hotel demand for May, versus just 25% of demand in May 2019.

Meanwhile, upper upscale and luxury hotels accounted for just 8% of U.S. hotel demand in May, down from 21% in May 2019.

"It's unsurprising that this [upper upscale and luxury] segment has been hurt the most," said Smith. "It's also the segment where we saw a lot of closures happen in April and May, and obviously they've been hit really hard by the loss of group and business travel."

Average daily rate (ADR) levels for STR's high-end classes have also contracted sharply, with the U.S. luxury class ADR for May at $185, versus $296 for the same month last year. The U.S. upper upscale ADR totaled $118 and $192 for May 2020 and May 2019, respectively.

According to Smith, these declines have caused "a kind of compression between the classes."

"In 2019, there was about a $120 difference between economy and upper upscale," Smith explained. "And now, in 2020, that same $120 difference will actually get you from economy to luxury class."

STR's 2020 hotel industry forecast predicts that U.S. revenue per available room (RevPAR) will decline 50.6% for the year, with industrywide ADR expected to dip 21.4%. Concurrently, occupancy is projected to fall 37.1%, while supply is set to rise 1.4%, and demand is predicted to fall 36.2%.

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