Costa Rica hotel performance over the past five years has resembled other leisure destinations frequented by Americans. Specifically, higher-end hotels and resort areas have done well, while other areas have remained flat.
Costa Rica vs Caribbean
Pre-2020, Costa Rica closely mirrored hotel performance in the Caribbean, with similar patterns and levels of growth in occupancy and average daily rate (ADR). This continued in the initial post-pandemic recovery, with occupancy in both areas stabilizing in 2023 and showing some softening in 2025.
However, ADR was the big differentiator across the two areas, with Caribbean ADR continuing to reach record highs and Costa Rica ADR falling from its record highs of 2023.
It is important to remember though, the Caribbean comprises a higher proportion of high-end hotels than Costa Rica. That is a contributor to the diverging paths in recent performance.
Regardless, both areas have followed a trend seen around the world, where higher-end hotels are outpacing lower-end hotels in performance growth.
Traveler types
The influence of inbound international travel in Costa Rica also helps to illustrate the “why” behind the data trends. The total number of inbound international travelers remains below 2019 levels.
However, there has been a shift – a greater number of Americans traveling to the country and fewer travelers from other Central American countries. Those more “local” travelers likely represented business travelers in addition to leisure with stays spread across hotels of all price points.
U.S. travelers are mainly traveling for leisure, staying in resort areas and higher-end hotels. Because of this, most of the growth seen in Costa Rica since 2020 has been in the Guanacaste Area—and in Upper Upscale and Luxury hotels. The capital city of San Jose has struggled, with year-to-date RevPAR still below 2019 levels.
Entering 2025, occupancy had started to soften across the country, even in parts of the industry benefitting most from American travelers.
Recent months have shown slight room rate declines as well, the first such decreases since the end of 2023. Though recent months are not historically the highest performance period for the country, June and July have usually outperformed the surrounding months of May and August, so the recent ADR declines come at a typically stronger time.
Conclusion
Costa Rica’s increased reliance on the U.S. traveler makes it more vulnerable to any slowdown from that demand source; however, with other international travelers choosing non-U.S. destinations, there is opportunity for growth from Europe and Canada.
If we do see a slowdown in international inbound demand to Costa Rica, expect a downstream effect on ADR, with less demand concentrated in the high-end, resort areas.
About CoStar Group, Inc.
CoStar Group (NASDAQ: CSGP) is a leading provider of online real estate marketplaces, information, and analytics in the property markets. Founded in 1987, CoStar Group conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of real estate information. CoStar is the global leader in commercial real estate information, analytics, and news, enabling clients to analyze, interpret and gain unmatched insight on property values, market conditions and availabilities. Apartments.com is the leading online marketplace for renters seeking great apartment homes, providing property managers and owners a proven platform for marketing their properties. LoopNet is the most heavily trafficked online commercial real estate marketplace with thirteen million average monthly global unique visitors. STR provides premium data benchmarking, analytics, and marketplace insights for the global hospitality industry. Ten-X offers a leading platform for conducting commercial real estate online auctions and negotiated bids. Homes.com is the fastest growing online residential marketplace that connects agents, buyers, and sellers. OnTheMarket is a leading residential property portal in the United Kingdom. BureauxLocaux is one of the largest specialized property portals for buying and leasing commercial real estate in France. Business Immo is France’s leading commercial real estate news service. Thomas Daily is Germany’s largest online data pool in the real estate industry. Belbex is the premier source of commercial space available to let and for sale in Spain. CoStar Group’s websites attracted over 163 million average monthly unique visitors in the third quarter of 2024. Headquartered in Washington, DC, CoStar Group maintains offices throughout the U.S., Europe, Canada, and Asia. From time to time, we plan to utilize our corporate website, CoStarGroup.com, as a channel of distribution for material company information. For more information, visit CoStarGroup.com.
This news release includes “forward-looking statements” including, without limitation, statements regarding CoStar’s expectations or beliefs regarding the future. These statements are based upon current beliefs and are subject to many risks and uncertainties that could cause actual results to differ materially from these statements. The following factors, among others, could cause or contribute to such differences: the risk that future media events will not sustain an increase in future occupancy rates. More information about potential factors that could cause results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, those stated in CoStar’s filings from time to time with the Securities and Exchange Commission, including in CoStar’s Annual Report on Form 10-K for the year ended December 31, 2023 and Forms 10-Q for the quarterly periods ended March 31, 2024, June 30, 2024, and September 30, 2023, each of which is filed with the SEC, including in the “Risk Factors” section of those filings, as well as CoStar’s other filings with the SEC available at the SEC’s website (www.sec.gov). All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
