The final U.S. hotel performance forecast of 2025 is in – and it’s not the news many hoped for. According to the latest from CoStar and Tourism Economics, both 2025 and 2026 projections have again been downgraded across occupancy, ADR, and RevPAR, signaling a tougher environment ahead.
For 2025, RevPAR has been lowered to -0.4% – marking the first annual decline in U.S. RevPAR since 2020. Projections for 2026 follow a similar trend, with all three metrics nudged downward.
“We expect little change in the macroeconomic environment as unemployment and prices continue to rise,” said Amanda Hite, STR President. “ADR is growing well below the rate of inflation, which in turn will put more pressure on margins.”
“Job market softening, policy uncertainty, and tariff costs remain near-term drags for consumers,” added Aran Ryan, director of industry studies with Tourism Economics.
Together, their comments paint a picture of slow growth, margin pressure, and an uneven recovery – a signal to hoteliers that forecasting for 2026 will require more nuance than ever before.
The K-Shaped Recovery: A Market Pulling in Two Directions
These latest revisions reinforce what many operators have already felt this year: a K-shaped recovery and a bifurcation of the market. Luxury and upper-upscale hotels continue to perform strongly, fueled by affluent travelers and resilient high-end corporate demand. Meanwhile, select-service and midscale properties are seeing softer booking patterns as middle-income guests wrestle with higher living costs and uncertainty about the broader economy.
This divergence has become the defining characteristic of the post-pandemic hotel cycle. Inflation, tariff concerns, and labor costs continue to pressure the middle of the market, while the top tier holds steady. The “average” recovery story no longer exists – it’s two very different stories unfolding at once.
Hospitality Is Still a Street-Corner Business
Digging deeper than chain scales, we know that hospitality has always been a street-corner business. Conditions at one hotel might look nothing like those a few blocks or a few brands away. That’s why it’s important to pay attention to the broader trends but more importantly focus on market and property-specific insight.
With the 2026 forecast showing tighter margins and slower growth, hoteliers should:
- Know your own business mix. Understand which segments – corporate, group, leisure, transient – are growing or shrinking and how each reacts to rate changes or economic signals.
- Track demand channels in real time. Identify which OTA, brand, or direct channels are delivering, and where costs of acquisition are creeping up.
- Study market-level indicators. Your comp set’s pricing strategy, local event calendar, airlift patterns, and even construction projects can all affect your forecast accuracy.
- Measure total profitability. With GOPPAR projections now declining, success depends on controlling expenses as much as driving top-line growth.
Of course, having all your data in one place allows operators to see trends faster, test assumptions, and plan scenarios with confidence.
How Hoteliers Can Adapt
- Build forecasts from the inside out.Start with your property’s historical performance, then layer in current booking pace, segment mix, and cost trends.Treat national averages as context.
- Plan for bifurcation.If youoperate across multiple tiers, create separate plans: a high-end playbook built around experience and rate discipline, and a value-segment playbook centered on efficiency and demand stimulation.
- Protect profit, not just revenue.Rising utilities, F&B, and labor costs mean top-line growthwon’t automatically translate to profit. Re-evaluate every department’s cost structure and ROI.
- Rethink “normal.”2019 is no longer a reliable benchmark. Build 2026 scenarios around the current economic reality and shifting traveler behaviors, not nostalgia.
The Bottom Line
The latest forecast downgrade doesn’t signal doom – it signals discipline. The market isn’t collapsing; it’s re-balancing. Some segments will thrive, others will tighten, and the difference between success and struggle will hinge on how well you understand your own data, and how well you can drive greater efficiency in your business.
Hospitality has always been about local realities and quick decisions made close to the front desk. The same principle applies to forecasting and strategy today: know your business, know your guests, and use your data effectively to act faster than the market around you.
Because while the national numbers set the tone, your numbers tell the real story.
About Otelier
Otelier is a hospitality data platform powering the future of hotel operations. Serving more than 10,000 hotels worldwide, Otelier provides the industry’s most comprehensive platform to help hotel owners and operators automate back-office processes and unlock a 360-degree view of their businesses. With more than 30 years of experience building solutions for the world’s leading hotel groups, Otelier is trusted by hotels of all sizes — from individual properties to hotel management groups to global brands – for real-time visibility into financial and operational performance. Learn more at otelier.io.
Jason Freed
Hospitality Data Evangelist
+1 330 221 6068
Otelier
