CoStar, Tourism Economics Lower Hotel Growth Forecast

(Hotel Stock photo courtesy of pixabay via pexels)

CoStar, Washington, D.C., and Tourism Economics, Philadelphia, further downgraded growth projections in their revised 2025-2026 U.S. hotel forecast.

The data firms forecasted lower growth rates across the top-line metrics, projecting demand will fall by 60 basis points, average daily rates will dip 50 basis points and revenue per available room will fall 1.1%, given continued underperformance and elevated macroeconomic concerns.

Similar adjustments were made for 2026: demand (-50 basis points), ADR (-30 basis points) and RevPAR (-70 basis points).

“Unrelenting uncertainty and inflation, coupled with tough calendar comps and changing travel patterns, have caused lower demand,” STR President Amanda Hite said. “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 Tourism Economics, noted the slowing U.S. economy should absorb the effects of tariffs without tipping into 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 added.

Hite noted the forecast’s gross operating profit per available room forecast, which measures a hotel’s overall financial performance, remains unchanged from the previous revision in June.