The US hotel industry is set to face challenging times as CoStar and Tourism Economics reveal their latest forecast. With a prediction of 0.4% decline in RevPAR (Revenue per Available Room) for the year 2025, the report paints a portrait of an industry grappling with rising costs and policy uncertainties.
Unveiling the Forecast
In a report that reverberated through the hospitality sector, CoStar and Tourism Economics unveiled an expected decline in the crucial performance metric similar to declines last seen in 2020 and 2009. The forecast anticipates a modest occupancy rate of 62.3% for 2025, with a steady ADR (Average Daily Rate) growth of 0.8%. As stated in Hotel Dive, the ripple effects of these predictions extend into 2026 with anticipated challenges despite signs of potential recovery.
Rising Economic Pressures
Various economic pressures loom large over the industry. Amanda Hite, president of CoStar subsidiary STR, emphasized that the rising costs, particularly in the food and beverage sector, are influencing the declines. Labor expenses are expected to edge higher, creating a landscape where tight margins become the norm.
Navigating the Storm
Industry experts are closely eyeing international travel trends as a potential ray of hope. As Aran Ryan from Tourism Economics points out, the broader travel economy is expected to “firm up moderately” with events like the FIFA World Cup 2026 possibly giving a much-needed boost to international visitation.
Industry Reactions
Across the industry spectrum, the sobering predictions are a call to adapt and innovate. Professionals at the Lodging Conference wrestled with technology, labor, and insurance costs—an indicator of the predominant concerns among hospitality stakeholders.
Despite the projected downturn, there exists cautious optimism. The anticipated household income growth and resumed hiring in 2026 suggest that the industry may yet navigate these troubled waters with resilience and ingenuity.
As the hospitality sector braces for a bumpy ride, it does so with an eye towards future opportunities that might reshape the landscape by 2026 and beyond. Industry veterans understand that looking forward with adaptability can carve out spaces for growth even in an uncertain economic climate.
