Dive Brief:
- At the NYU International Hospitality Investment Forum Monday, CoStar and Tourism Economics downgraded their 2025 and 2026 growth projections for U.S. hotel top-line performance metrics, including RevRAR, citing elevated macroeconomic concerns.
- The companies now forecast that U.S. hotel RevPAR and ADR will grow 1% and 1.3% year over year, respectively, in 2025, down from their previous January projections of 1.8% and 1.6% year-on-year growth. The companies also lowered their RevPAR and ADR growth guidance for 2026 and downgraded occupancy, supply and demand projections for both years as well.
- The downgrades come as economic uncertainty mounts following President Donald Trump’s tariff announcements and other recent government actions. Aran Ryan, director of industry studies at Tourism Economics, said that the economy — and the travel sector — will “walk on a tight rope” through the second half of this year.
Dive Insight:
Though “recession risks have eased,” according to Ryan, CoStar and TE downgraded their 2025 and 2026 growth projections for all measured top-line hotel performance metrics on the heels of underperformance in the first quarter of the year.
In addition to lowering growth guidance on RevPAR and ADR, the companies now project that occupancy will sit at 62.8% in 2025, down from their January forecast of 63.1%. The companies forecast 0.8% and 0.5% year-over-year growth for supply and demand in 2025, respectively, down from their previous projections of 0.9% and 1.1% growth.
The downgrades come amid “consumers facing higher prices and a weaker labor market, businesses tapping the brakes on investment, and soft international visitor volumes,” Ryan said in a Monday statement.
Hotel CEOs noted shifts in traveler demand and booking behavior during Q1 earnings calls, with several companies — including Marriott International, Hyatt Hotels, Choice Hotels International and Wyndham Hotels & Resorts — similarly downgrading 2025 RevPAR guidance, citing ongoing economic uncertainty.
Recent Trump administration actions are slated to have a downward impact on corporate travel and international visitor spending as well, per recent reports from the Global Business Travel Association and the World Travel & Tourism Council.
Until consumer confidence improves, “demand is going to remain softer — especially in the middle and lower price tiers,” Amanda Hite, president of CoStar-owned STR, said in a Monday statement.
“Rate is pushing the top line in the group segment, and business transient should continue to recover in a lot of industries, but leisure gains are going to be more isolated,” she said.
Hite also noted that booking windows have shortened, which “adds to the challenges hoteliers will face in the coming quarters.”
Onstage at NYU IHIF, Hite shared that bookings for July and August are down from last year. “This is not something we’re raising a big red flag about right now,” she said. “This is more a highlight of that shortened booking window.”
However, it isn’t all bad news for hotels. “The headlines make it seem like things are falling off the cliff,” Hite said Monday. “But we do have demand growing.”
