Dive Brief:
- CoStar and Tourism Economics further downgraded their U.S. hotel growth forecast amid “continued underperformance and elevated macroeconomic concerns,” according to a forecast published Thursday.
- The firms lowered expectations for 2025 hotel demand by 0.6 percentage points, ADR by 0.5 percentage points and RevPAR by 1.1 percentage points. The forecast also downgraded expectations for 2026, with projected demand, ADR and RevPAR down 0.5, 0.3 and 0.7 percentage points, respectively.
- This marks the second time CoStar and Tourism Economics have downgraded their hotel forecast this summer. In a statement, Amanda Hite, president of CoStar-owned STR, said that “unrelenting” uncertainty and inflation, “coupled with tough calendar comps and changing travel patterns, have caused lower demand.”
Dive Insight:
CoStar and Tourism Economics now project that RevPAR will drop 0.1% year over year in 2025 and grow 0.8% in 2026. ADRs are projected to grow 0.8% year over year this year and 1% next year, and occupancy will dip slightly this year and next, from 63% in 2024 to 62.5% in 2025 and 62.3% in 2026.
As 2025 has progressed, the hotel industry has “seen rate growth converge closer with demand,” Hite noted.
“We expect little change in the economic outlook over the next 18 months, but we are optimistic that once trade talks have concluded and the impact of the budget reconciliation bill comes to fruition, hotel performance will recover,” Hite said.
CoStar and Tourism Economics maintained their projections for gross operating profit per available room, but revised margins down 0.3 percentage points for 2025 “mainly due to a potential increase in expenses, particularly F&B,” Hite said.
Hospitality and food and beverage CEOs told Hotel Dive earlier this year that tariffs will likely drive hotel food and beverage costs higher.
In a statement, Aran Ryan, director of industry studies at Tourism Economics, said a slowing U.S. economy “should absorb the effects of tariffs without tipping into a recession.”
“The current environment — characterized by slowing consumer spending, reduced business capital spending, and declining international visitation — will transition to one boosted moderately by tax cuts and less policy uncertainty as we look to 2026,” he added.
Those tax cuts include provisions in President Donald Trump’s One Big Beautiful Bill Act, which the American Hotel & Lodging Association applauded upon its July passing.
CoStar and Tourism Economics’ adjusted forecast comes on the heels of several major hotel companies posting revenue declines in the second quarter of 2025. Choice Hotels International, Hilton and Wyndham Hotels & Resorts all saw reduced U.S. RevPAR in Q2.
CoStar and Tourism Economics released their latest projections as part of the 17th annual Hotel Data Conference in Nashville, Tennessee.
