Weaker demand, economic uncertainty, and rising costs dampen 2025–26 forecasts
Aug 12, 2025
CoStar and Tourism Economics have issued a further downgrade to their U.S. hotel performance projections for 2025–26, reflecting ongoing underperformance, economic uncertainty, and shifting travel patterns. Demand, ADR, and RevPAR growth expectations were cut across both years, while GOP margins for 2026 saw a sharper downward revision due to anticipated expense pressures.
Key takeaways
- Lowered growth expectations: 2025 demand forecast cut by 0.6 points, ADR by 0.5 points, and RevPAR by 1.1 points; 2026 forecasts cut by 0.5, 0.3, and 0.7 points respectively.
- Economic headwinds: Ongoing inflation, softer consumer spending, reduced business investment, and weaker international travel cited as key drags on performance.
- Changing travel patterns: STR notes rate growth is now more closely tracking demand growth, limiting pricing gains.
- Policy-linked optimism: Forecasts see potential improvement from trade resolution and budget reconciliation measures by late 2026.
- Profitability outlook mixed: GOPPAR forecast unchanged, but GOP margins revised down 0.3 points for 2025 and 2.3 points for 2026 due to rising expenses, especially in food & beverage.
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