Summary:
- CoStar and TE lowered 2025–26 U.S. hotel growth projections due to reduced demand.
- Forecast cuts for 2025: demand down 0.6 points, ADR 0.5, RevPAR 1.1; 2026 saw similar reductions of 0.5, 0.3, and 0.7.
- Hotel performance projected to recover as trade talks conclude, budget bill takes effect.
COSTAR AND TOURISM Economics lowered U.S. hotel growth projections for 2025 and 2026, citing reduced demand from uncertainty, inflation, year-over-year comparisons and shifting travel patterns. The economic outlook is expected to remain stable, with hotel performance likely to recover as trade talks conclude and the Big Beautiful Bill Act takes effect.
The forecast released at the 17th Annual Hotel Data Conference lowered 2025 growth projections—demand by 0.6 points, ADR by 0.5 and RevPAR by 1.1—citing underperformance and macroeconomic conditions. Similar revisions were made for 2026, with demand down 0.5 points, ADR 0.3 and RevPAR 0.7.
“Unrelenting uncertainty and inflation, coupled with tough calendar comps and changing travel patterns, have caused lower demand,” said Amanda Hite, STR president. “Additionally, as the year has unfolded, we’ve seen rate growth converge closer with demand. We expect little change in the economic outlook over the next 18 months, but we are optimistic that once trade talks have concluded and the impact of the budget reconciliation bill comes to fruition, hotel performance will recover.”
Aran Ryan, director of industry studies at TE, said the slowing U.S. economy should absorb tariff impacts without entering a recession.
“The current environment—characterized by slowing consumer spending, reduced business capital spending and declining international visitation—will transition to one boosted moderately by tax cuts and less policy uncertainty as we look to 2026,” he said.
“While our GOPPAR forecast remains unchanged from the previous revision, GOP margins were revised down 0.3ppts for 2025 and 2.3ppts for 2026, mainly due to a potential increase in expenses, particularly F&B,” Hite said.
In June, CoStar and TE lowered 2025–26 U.S. hotel growth projections due to first-quarter underperformance and macroeconomic factors, revising supply down 0.1 percent, demand 0.6 percent, ADR 0.3 percent and RevPAR 0.8 percent.
