CoStar, Tourism Economics Downgrade U.S. Hotel Forecast

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CoStar and Tourism Economics further downgraded their hotel performance projections in their final forecast of 2025.

For 2025, the research firms lowered their occupancy forecast 0.2 percentage points to 62.3%, while average daily rate was maintained at +0.8% for the year. The revenue per available room forecast was downgraded 0.3 percentage points to -0.4%. The last total-year RevPAR declines in the U.S. occurred in 2020 and 2009.

The firms made similar adjustments for 2026: occupancy (-0.3 percentage points), ADR (-0.1 percentage points) and RevPAR (-0.3 percentage points).

“We expect little change in the macroeconomic environment as unemployment and prices continue to rise,” STR president Amanda Hite said. “As a result, our hotel performance outlook for the remainder of this year and next were lowered once again. ADR is growing well below the rate of inflation, which in turn will put more pressure on margins.”

Aran Ryan, director of industry studies with Tourism Economics, noted job market softening, policy uncertainty and tariff costs remain near-term drags for consumers. “However, heading into 2026, we expect the U.S. travel economy to firm up moderately,” he said. “Household income growth will continue, accompanied by tax cut benefits, resumed hiring, and less policy instability. Expanding global long-haul travel and World Cup interest will bring improved international visitation.”

Hite said the firms lowered their forecast for gross operating profit per available room from the previous forecast, “with the decrease in 2025 being mainly due to higher expenses, especially in the Food and Beverage department as well as increased costs in other operated departments, marketing and utilities.” She said labor costs will be slightly higher in 2025, likely due to the increase in the aforementioned F&B department, “which is traditionally more labor-intensive.”