Summer RevPar slump signals rocky outlook for hotels

Weak demand, international travel declines, and economic uncertainty weigh on industry performance

U.S. hotels saw revenue per available room (RevPAR) drop in July, August, and early September, continuing a trend of weak performance that began in Q2. Industry leaders are pointing to declining business and government travel, reduced international inbound demand, and broader economic uncertainty as key factors, raising concerns about how hotel companies will close out Q3 and finish 2025.

Key takeaways

• RevPAR decline in Q3: U.S. RevPAR fell 1% year over year in August after a 1.1% drop in July, with further declines reported in September.
• Occupancy under pressure: Occupancy fell 1.3% in August, offsetting a slight 0.3% ADR increase, according to CoStar.
• Major chains hit in Q2: Wyndham (-4%), Choice (-2.9%), Hilton (-1.5%), and IHG (-0.9%) all reported U.S. RevPAR declines, while Marriott posted flat results.
• Las Vegas softness: MGM and Caesars revenues declined 4% and 3.7%, respectively, reflecting weaker Canadian tourist inflows and reduced domestic demand.
• International and government travel drag: CEOs highlighted reduced inbound international business and weaker government travel as major headwinds.
• Forecast downgrade: CoStar and Tourism Economics now expect full-year 2025 U.S. RevPAR to decline 0.1%, with occupancy slipping from 63% to 62.5%.
• Mixed CEO outlooks: Some executives remain cautious, citing tariffs and economic uncertainty, while others are optimistic about recovery in Q4 and 2026.

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