Photo Credit: Who is Danny for Adobe Stock
Following a previous lowering of expectations in June, STR parent company CoStar and Tourism Economics have further downgraded growth projections in an updated 2025-'26 U.S. hotel forecast, announced at the Hotel Data Conference in Nashville.
Due to continued underperformance and increased macroeconomic concerns, predicted growth rates for this year were lowered across the following top-line metrics: demand by 0.6 percentage points, average daily rate by 0.5 percentage points and revenue per available room by 0.7 percentage points.
"Unrelenting uncertainty and inflation, coupled with tough calendar comps and changing travel patterns have caused lower demand," said Amanda Hite, president of STR. "Additionally, as the year has unfolded, we've seen rate growth converge closer with demand. We expect little change in the economic outlooks 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."
Similar adjustments were made for 2026 as well: Demand was lowered by 0.5 percentage points, ADR by 0.3 percentage points and RevPAR by 0.7 percentage points.
"The slowing U.S. economy should absorb the effects of tariffs without tipping into a recession," said Aran Ryan, director of industry studies at Tourism Economics. "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."
Photo Credit: CoStar/Tourism EconomicsThe forecast was initially lowered in June, as presented at the NYU International Hospitality Investment Forum. Since then, predictions for the gross operating profit per available room metric have stayed the same.
"While our GOPPAR forecast remains unchanged from the previous revision, GOP margins were revised down 0.3 percentage points for 2025 and 2.3 percentage points for 2026, mainly due to a potential increase in expenses, particularly food and beverage" Hite added.
Photo Credit: CoStar/Tourism Economics