U.S. hotel outlook brightens for 2026

Stronger demand across multiple segments is driving a more optimistic forecast, although profitability remains under pressure from inflation

The U.S. hotel industry is entering 2026 with a stronger outlook than previously expected. At the NYU International Hospitality Industry Investment Forum, CoStar and Tourism Economics significantly upgraded their forecast, citing stronger-than-anticipated demand from both group and transient travelers. Growth is expected across nearly all hotel segments, supported by resilient consumer spending, a stable labor market, and improving domestic travel trends. While revenue prospects are improving, rising operating costs continue to challenge hotel profitability.

Key takeaways

• RevPAR forecast upgraded significantly: CoStar and Tourism Economics now expect U.S. hotel RevPAR to grow by 2.8% in 2026, up sharply from an earlier forecast of 0.6%.
• Demand exceeded expectations: Hotel room demand increased by more than 8 million room nights during the first four months of 2026, helping drive the improved outlook.
• Growth extends beyond luxury hotels: While luxury properties are forecast to achieve the strongest RevPAR growth at 5.3%, upscale, upper-midscale, midscale, and even economy hotels are expected to post gains.
• Inflation remains a challenge: Revenue growth is improving, but operating costs are rising faster, limiting margin recovery and keeping profitability below pre-pandemic levels in real terms.
• High-income travelers support demand: Wealthier households continue to account for a growing share of leisure lodging spending, helping sustain hotel performance despite economic pressures on lower-income consumers.
• Hotels are outperforming short-term rentals: During the first four months of 2026, hotel room-night demand grew faster than short-term rental demand, indicating continued strength for traditional lodging providers.
• Domestic travel is helping offset international weakness: Declining outbound U.S. travel is expected to redirect more travelers toward domestic destinations, partially compensating for softer inbound international demand.
• International travel recovery is beginning: After several years of declines, inbound international travel to the U.S. is forecast to grow by approximately 3% in 2026, with stronger acceleration expected in 2027.

Source: Travel Weekly

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