CBRE Forecasts Steady Hotel Sector Growth

(Hotel stock photo courtesy of Max Vakhtbovycn/pexels.com)

CBRE, Dallas, forecasts that hotel revenue per available room will grow steadily in 2025 and urban locations will outperform due to improved travel and the recovery of inbound international travel.

CBRE forecasts a 2.0% increase in RevPAR growth in 2025, with occupancy improving by 23 basis points and the average daily rate increasing by 1.6%. This projected growth indicates the continued recovery of the lodging sector, with RevPAR expected to be 16.6% higher in 2025 than pre-pandemic levels in 2019.

CBRE’s baseline forecast assumes a 2.4% GDP growth rate and average inflation of 2.5% for 2025. Given the typically strong correlation between GDP and RevPAR growth, the relative strength of the economy will directly impact the lodging industry’s performance.

“The U.S. hotel market is poised for steady growth in 2025, primarily led by continued outperformance of the urban segment, which should experience RevPAR growth of 2.8% this year,” said Rachael Rothman, CBRE’s head of hotel research and data analytics. “The sector’s resilience and the sustained demand for higher-priced hotels bode well for the upcoming year.”

With numerous events planned for the next few years including the 2026 FIFA World Cup held in the U.S., Mexico and Canada and the 2028 Summer Olympics in Los Angeles CBRE projects RevPAR growth within the 1.5% to 3.5% range over the next several years, barring a recession.

“Despite existing cost pressures, the U.S. hotel market fundamentals remaining robust, we anticipate a resurgence in investment activity in the latter half of 2025,” said Bill Grice, president of CBRE Hotels in the Americas. “With ample dry powder available and the potential for a lower Fed Funds rate before year-end, we expect to see a narrowing of buyer and seller expectations, fueling increased transaction activity.”

CBRE expects restrained supply growth due to high financing and construction costs, averaging less than 1% over the next three years. “Potential additional tariffs, labor shortages or the Fed pulling back on further interest rate reductions could temper supply growth even more, enhancing pricing leverage and elevating replacement costs for existing assets,” the report noted.