CoStar, Tourism Economics Downgrade Hotel Forecast

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

“Given Q1 underperformance and elevated macroeconomic concerns, forecasted growth rates were lowered across the top-line metrics: supply (-0.1%), demand (-0.6%), ADR (-0.3 %) and RevPAR (-0.8%), the report said.

Similar adjustments were made for 2026: supply (-0.5%), demand (-0.3%), ADR (-0.7%) and RevPAR (-0.6%).

“Top-line performance is still growing, even in the current environment,” STR President Amanda Hite said. “Until consumer confidence improves, however, demand is going to remain softer, especially in the middle and lower-price tiers.”

Hite noted guest room rates are pushing the top line in the group segment and said business transient travel should continue to recover in a lot of industries, but leisure gains are going to be more isolated. “Our forward-looking data continues to support the observations of many industry stakeholders that booking windows have shortened. That adds to the challenges hoteliers will face in the coming quarters.”

Aran Ryan, director of industry studies at Tourism Economics, said his firm expects higher consumer prices, less businesses investment, soft international visitor volumes and a weaker labor market in the second half of 2025. “While recession risks have eased, the economy—and the travel sector—will walk on a tight rope through this period,” he said.