Feb 2025
Slow but positive growth for the U.S. Hotel Market in 2025
The hotel industry took a hit during the pandemic due to travel restrictions and people’s reluctance (and lack of funds) to travel. However, the market has experienced a recovery over the past few years, as consumers tried to make up for the time spent indoors during quarantine.
While hotel market growth has slowed, it is still trending upward. According to CBRE’s U.S Hotels State of the Union December 2024 Edition, revenue per available room (RevPAR) growth in 2025 is forecast at 1.7%, primarily driven by 1.4% growth in average daily rates (ADR).
Similarly, STR and Tourism Economics updates to their 2024-25 U.S. hotel forecast predict modest growth. The report projects a slight growth in occupancy in 2025, reaching 63.4%. Meanwhile, ADR and RevPAR are expected to increase by 2.0% and 2.6%, respectively, compared to last year.
Which hotel sectors will perform best?
Travelers’ incomes have a substantial effect on how a hotel sector will fare. In 2025, STR and Tourism Economics predict that fewer lower-income travelers will constrain the midscale and economy-class hotels’ RevPAR year-over-year (YOY) growth.
However, luxury, upper upscale, and upscale mid will see a 1.6%, 3.3% and 3.7% increase respectively this year. Interestingly, independent hotels will also outperform midscale and economy hotels, with a predicted RevPAR YOY growth of 1.7%.
