Hotel performance in 2025 will see moderate growth, influenced by economic factors, shifting demand, and rising costs
Feb 6, 2025
As 2025 approaches, hoteliers are eager for insights into market performance and emerging trends. At the Americas Lodging Investment Summit (ALIS), industry analysts provided forecasts and key takeaways for the upcoming year, highlighting expected revenue growth, shifting demand patterns, and cost considerations.
Key takeaways
- RevPAR growth: Forecasted at 1.8% for 2025, with stronger performance in the first half due to disaster-related demand;
- ADR & occupancy: Average daily rate (ADR) is expected to rise 1.6%, with occupancy reaching 63.1%;
- Luxury and upscale segments: Luxury RevPAR projected to grow 2.9%, while upscale and upper-midscale segments face supply challenges;
- Economy hotels rebound: After years of decline, RevPAR in this segment is expected to grow due to negative supply growth and higher demand;
- Operating profit: Expected to increase slightly, though inflation-adjusted GOP will remain 1% below 2019 levels;
- Customer acquisition costs: Hotels spend 15-25% on guest acquisition, second only to labor costs;
- Booking channel trends: Brand.com retains a 25% share, but OTAs like Expedia and Booking.com continue to grow with aggressive marketing spend;
- Group & corporate travel: Convention center business is up 5%, but corporate transient demand faces headwinds from stock market fluctuations and remote work trends;
- fLeisure travel strength: Leisure demand remains the primary driver of hotel business, with a positive domestic outlook supported by consumer spending trends.
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