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U.S. hotel RevPAR strong in Q1 despite economic fears

  • Automatic
  • 7 May 2025
  • 2 minute read
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This article was written by Hospitality Today. Click here to read the original article

RevPAR grew 2.2% year on year in the first quarter, though hotel CEOs are bracing for potential headwinds

May 7, 2025

The U.S. hotel sector saw modest growth in Q1 2025, with traditional hotel demand up slightly year over year. However, alternative accommodations like short-term rentals and cruise lines are growing more rapidly, signaling shifting consumer preferences. Labor pressures have eased somewhat, and while wage growth continues, hospitality wages remain well below the national average. Travel demand shows mixed signals, with international arrivals slightly up but a rare dip in airline passenger volume in March. Market-specific factors, like major events and weather-related recovery efforts, contributed to strong RevPAR growth in select cities. Industry leaders remain cautiously optimistic despite broader economic uncertainties and geopolitical factors that could weigh on demand.

Key takeaways

  • Occupancy & demand: U.S. hotel occupancy rose 0.4% YoY in Q1; demand (+1%) outpaced supply (+0.6%).
  • Competition: Demand for short-term rentals and cruises outpaced hotels, indicating changing traveler preferences.
  • Labor market: Hotel job openings dropped nearly 9% in Q1; average wages grew 4% but remain ~$11 below national average.
  • Travel trends: Slight increase in international travel, but March saw the first YoY drop in airline passenger volume in four years.
  • Top markets: New Orleans, Tampa, and Columbus led Q1 RevPAR growth, aided by events and regional factors.
  • Regional trends: 8 of the top 10 RevPAR growth markets saw double-digit gains; 4 of these were in the South.
  • Outlook: CEOs from Hilton, Caesars, and MGM expressed optimism, while Wyndham and Hyatt lowered full-year RevPAR forecasts.
  • Uncertainty factors: Trade policies and global instability could impact pricing and demand going forward.

Get the full story at Hotel Dive

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