What's Happening?
The U.S. hotel industry has reported a notable increase in both the average daily rate (ADR) and revenue per available room (RevPAR) for the week ending October 11, 2025. This marks the first rise in RevPAR since the end of August, with a 0.6% increase,
while ADR grew by 2.6%, aligning with the rate of inflation for the second consecutive week. Despite these gains, occupancy rates have continued to decline for the 16th straight week, though at a slower pace. The increase in ADR was unexpected, given the modest average increase of 0.2% over the previous 21 weeks. The Top 25 Markets saw a 2.8% increase in ADR, with significant contributions from events such as college football games and the start of the fall break, which boosted demand in smaller markets.
Why It's Important?
The recent growth in ADR and RevPAR is significant for the U.S. hotel industry, indicating a potential recovery in the sector despite ongoing challenges with occupancy rates. The increase in group demand, particularly in major markets like San Francisco, which saw a 24.0% rise in RevPAR, highlights the importance of events and holidays in driving hotel performance. This growth could signal a positive trend for the industry, providing a boost to hotel revenues and potentially leading to increased investment and employment opportunities within the sector. However, the sustainability of this growth remains uncertain, especially with the continued decline in occupancy rates.
What's Next?
Looking ahead, the continuation of ADR growth at or above the rate of inflation is uncertain, given the ongoing decline in occupancy rates. However, strong group demand and favorable calendar conditions could lead to better-than-expected ADR performance in the coming weeks. The industry will likely focus on capitalizing on upcoming events and holidays to sustain growth. Stakeholders, including hotel operators and investors, will be closely monitoring these trends to assess the potential for a sustained recovery in the sector.
