Dive Brief:
- CoStar and Tourism Economics further downgraded their U.S. hotel growth outlook for 2025 in their final forecast revision of the year, amid rising inflation and broader economic uncertainty, according to a report published Wednesday.
- The organizations lowered their occupancy forecast by 0.2 percentage points, now expecting 62.3% occupancy for full-year 2025. Meanwhile, they held their ADR outlook steady at 0.8% growth for the year. However, the companies downgraded their RevPAR forecast and now expect the metric to decline 0.4% year over year in 2025. The last full-year RevPAR declines in the U.S. occurred in 2020 and 2009, according to CoStar.
- The two companies also downgraded their hotel growth outlook for 2026 across all three performance metrics. Several headwinds, including rising costs, will challenge hotels in the near term, but improving international inbound travel fundamentals could bring opportunities for the industry next year, Aran Ryan, director of industry studies with Tourism Economics, said in the forecast.
Dive Insight:
CoStar and Tourism Economics previously lowered their 2025 hotel growth outlook in June and August. This November downgrade comes as the companies “expect little change in the macroeconomic environment as unemployment and prices continue to rise,” Amanda Hite, president of CoStar subsidiary STR, said in the forecast.
Both CoStar and Tourism Economics project U.S. hotels will see lower gross operating profit per available room in 2025, “mainly due to higher expenses, especially in the F&B department,” Hite said, adding that labor costs will be slightly higher in 2025 as well.
Hite said that ADR, specifically, is growing “well below the rate of inflation, which in turn will put more pressure on margins.”
Rising operating expenses, including labor, technology and insurance, were a top concern among hospitality professionals at this year’s Lodging Conference.
A softening job market, policy uncertainty and tariff costs will “remain near-term drags for consumers,” Ryan said, adding that the challenges will present additional headwinds for hotels in the near term.
CoStar and Tourism Economics also lowered their 2026 growth outlooks for occupancy, ADR and RevPAR by 0.3 percentage points, 0.1 percentage points and 0.3 percentage points, respectively. The companies expect ADR to increase 0.9% year over year for full-year 2026, and project a 0.5% RevPAR increase in the coming year.
Heading into 2026, Ryan said, Tourism Economics expects the U.S. travel economy “to firm up moderately,” with expanding global long-haul travel and FIFA World Cup 2026 interest bringing improved international visitation. Hotel demand, though, has so far been slow ahead of the World Cup, according to recent findings.
Household income growth will continue in 2026 as well, Ryan projects, accompanied by tax cut benefits, resumed hiring and less policy instability.
