U.S. Hotel Industry Faces Downgraded Growth Forecasts Amid Economic Uncertainty

What's Happening?

The U.S. hotel industry is preparing for slower growth as CoStar and Tourism Economics have revised their forecasts for 2025-26 downward. This adjustment, announced at the 17th Annual Hotel Data Conference, reflects ongoing economic uncertainties and subdued performance metrics. Key indicators such as demand, Average Daily Rate (ADR), and Revenue Per Available Room (RevPAR) have been lowered, with demand expected to decrease by 0.6 percentage points in 2025 and 0.5 in 2026. Despite these challenges, there is cautious optimism for improvement post-trade talks and budget reconciliation impacts.

Why It's Important?

The downgraded forecasts highlight the challenges facing the U.S. hotel industry amid economic uncertainties, including persistent inflation and changing travel patterns. These factors are impacting consumer and business spending, as well as international visitor numbers. The revised forecasts suggest that the industry must adapt to these conditions to maintain profitability. The unchanged Gross Operating Profit Per Available Room (GOPPAR) forecast, despite potential expense increases, underscores the need for strategic cost management. The industry's ability to navigate these challenges will be crucial for sustaining growth and competitiveness.