Rate growth continues to power U.S. hotel performance

Luxury and urban hotels are benefiting most from sustained pricing strength

U.S. hotel performance continued its upward trajectory during the week of May 10–16, marking the sixth consecutive week of RevPAR growth. The latest STR data shows that pricing power — rather than major demand acceleration — remains the primary driver of industry performance, particularly for luxury and upper-upscale hotels in major urban markets. Business and group travel continued to strengthen weekday demand, while concerts, conferences and sporting events created localized spikes across several U.S. destinations. Globally, hotel performance remained uneven, with strong growth in markets such as Canada, Italy and Japan offset by softer results in parts of Europe, Mexico and the Gulf region.

Key takeaways

• ADR remains the industry’s main growth engine: U.S. RevPAR increased 5.4% year over year, driven primarily by ADR growth of 3.9%, while occupancy reached 68.2%, the highest weekly level recorded so far this year. For many hotels, rate discipline continues to outperform pure volume strategies.
• Weekday business demand is strengthening: Most of the increase in rooms sold came from Sunday-through-Thursday demand, supported by continued recovery in business and group travel, particularly in higher-rated hotel segments and larger urban markets.
• Luxury and upper-upscale hotels continue to outperform: Higher-end chain scales remain the strongest-performing segments in the market. Luxury hotels recorded nearly 8% RevPAR growth over the past three weeks, largely due to their ability to sustain strong pricing.
• Economy hotels continue to lag behind: STR described the market as increasingly “K-shaped,” with economy hotels underperforming while upscale and luxury segments capture most pricing and demand growth. This suggests continued polarization across traveler segments.
• Major cities are leading overall performance: Twenty of the top 25 U.S. hotel markets posted RevPAR gains, with aggregate weekly ADR reaching $216 — the highest combined weekly level of the year for those markets.
• Events remain powerful short-term demand drivers: Orlando, Philadelphia and Atlanta all saw significant performance lifts tied to major events including Rolling Loud, the PGA Championship and DreamHack. Hotels benefiting most were those able to capitalize on compression and transient demand spikes.
• Secondary markets remain more event-dependent: Outside the largest U.S. markets, hotel performance was more uneven and closely tied to local event activity, with weaker ADR growth limiting broader RevPAR gains.
• Global hotel recovery remains uneven: While Canada, Italy, India and Japan posted strong gains, hotel markets in Germany, France, Mexico and GCC countries continued to experience softer occupancy and demand trends.

Source: CoStar

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