U.S. Hotels State of the Union September 2025 Edition

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Key Takeaways:

Economy

GDP growth remains below the long-term avg, and inflation remains sticky.
CBRE raised its 2025 GDP forecast to 1.6% from 1.3%. Due to the higher expected base in 2025, CBRE lowered its 2026 GDP growth estimate to 1.8% from 2.0%. Both 2025 and 2026 are expected to be below the 2.1% long run average. CPI is also expected to remain elevated through at least 2026. Soft top-line growth and elevated inflation will put sustained pressure on hotel profits and margins.
Unemployment remained at 4.2% in line with July 2024.
Real disposable income growth slowed in July to 2.0% while the personal savings rate grew to a healthy 4.4%. Wage gains continue to outpace inflation suggesting that consumers have money to travel. Unfortunately, RevPAR has continued to decline owing to cannibalization and the loss of inbound international travel.
CMBS volumes decreased, and average loan size fell as interest rates ticked up.
CMBS rates increased slightly up 10bps in July to 7.3% and credit spreads narrowed by 20 basis points y/y. CMBS loan issuance fell from $2.5B in July 2024 to $1.1B in July 2025. Average loan size fell as well from $102.4 million to $78.8 million as fewer loans were issued with loan count falling to 13 from 24 a year ago.

Current Trends

After falling 1.1% in July, August MTD RevPAR has fallen 0.6% year-over-year.
August RevPAR MTD contracted again as weaker ADR growth of 0.4% was offset by a 1.0% drop in occupancy. With the lack of positive momentum on the horizon, it is likely that the past five months of falling occupancy suggests ADR declines later in the year. The luxury chain scale outperformed RevPAR gains of 2.3% MTD in August.
STR demand share of 16.0% in July is nearing its pandemic era peak.
STR demand increased again in July, up by 3.6% y/y outpacing the 0.3% decline in hotel demand. Competition from alternative lodging options continues to hamper hotel demand. Short term rental RevPAR increased 6% in July y/y as ADR rose to 140% of 2019 and occupancy remained steady at 101% of 2019.
Operating profits declined 2.7% as costs outpaced total revenue growth in June.
While top line growth outpaced RevPAR growth in June, rising 1.2%, cost increases pressured margins which contracted 0.1 p.p on a TTM basis resulting in declining profits. As weaker revenue growth and higher inflation persist through 2026, we expect margins to continue to be under pressure.

Food for Thought

Business sentiment remains stable, and earnings growth has been solid.
Despite softer GDP growth and persistent inflation, business sentiment has remained steady at 99 in July while earnings growth is forecasted to increase 13.7% in Q4 2025. On the other hand, consumer sentiment has fallen from 102 in July 2024 to 97 in July of 2025 and hotel demand is increasingly consumer reliant.
Inbound international travel volumes fell again in July.
As shifting sentiment sets in, inbound international visitation fell 3.1% y/y in July. Conversely, outbound international travel volumes increase 6.6%. The imbalance between inbound and outbound travel volumes is likely to persist through 2026 a meaningful headwind to hotel demand.
TSA throughput increased in August by 1.5%.
Throughput growth may accelerate in the back half of the year as comparisons get easier, hopefully leading to more robust RevPAR trends. Google searches for corporate and redemption travel increased again in August, up 6.4% and 3.3% y/y, respectively, which could point to stronger travel trends in the fall.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2023 revenue). The company has more than 130,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.