What's Happening?
CoStar and Tourism Economics have revised their U.S. hotel growth forecast for 2025-26, citing continued underperformance and macroeconomic concerns. The forecasted growth rates for key metrics such as demand, average daily rate (ADR), and revenue per available room (RevPAR) have been lowered. Specifically, demand is expected to decrease by 0.6 percentage points in 2025 and 0.5 percentage points in 2026. ADR is projected to decline by 0.5 percentage points in 2025 and 0.3 percentage points in 2026, while RevPAR is anticipated to drop by 1.1 percentage points in 2025 and 0.7 percentage points in 2026. The adjustments are attributed to factors such as inflation, changing travel patterns, and economic uncertainty.
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Why It's Important?
The revised forecast highlights the challenges facing the U.S. hotel industry, which is grappling with economic headwinds and shifting consumer behaviors. The lowered growth expectations could impact hotel operators, investors, and related sectors such as tourism and hospitality services. The industry may face pressure to adapt to changing market conditions, potentially affecting employment and investment in the sector. The forecast also underscores the broader economic challenges, including inflation and reduced consumer spending, which could have ripple effects across various industries.
What's Next?
The hotel industry is expected to monitor economic developments closely, including trade negotiations and the impact of fiscal policies like the budget reconciliation bill. Stakeholders may need to adjust strategies to navigate the uncertain environment, potentially focusing on cost management and operational efficiencies. The industry will also be looking for signs of recovery as economic conditions stabilize and consumer confidence improves.
