U.S. hotel outlook improves as demand exceeds expectations

Stronger group and transient travel are creating a more favorable revenue environment for hoteliers

The outlook for the U.S. hotel industry has improved significantly after a stronger-than-expected start to 2026. CoStar and Tourism Economics have raised their forecasts for occupancy, average daily rate (ADR), and RevPAR growth, citing robust transient and group demand during the first four months of the year. While some economic uncertainty remains, the revised forecast suggests that many hotels could see stronger revenue performance than previously anticipated.

Key takeaways

• RevPAR forecast raised: CoStar and Tourism Economics now expect U.S. hotel RevPAR to grow 2.8% in 2026, reflecting stronger-than-anticipated performance through April.
• Demand remains healthy: Hotels sold more than 8 million additional room nights during the first four months of the year compared with the same period in 2025, signaling continued travel demand despite economic headwinds.
• Group business is gaining momentum: Meetings and events are contributing meaningfully to growth, particularly in secondary markets where small and mid-sized gatherings are driving additional room demand.
• Occupancy outlook improves: Forecasts now call for occupancy growth in 2026 after earlier expectations suggested a decline, indicating that demand is expanding faster than supply in many markets.
• Luxury hotels lead pricing power: Higher-end properties continue to achieve the strongest ADR growth, benefiting from resilient spending among affluent travelers.
• Shoulder-day performance strengthens: Hotels are seeing improved occupancy on traditionally softer days such as Sundays and Thursdays, helping to smooth demand throughout the week.
• Performance varies by segment: While overall demand is growing, economy and lower-priced hotels continue to face greater pricing pressure as travelers remain value-conscious.
• What this means for hoteliers: The revised forecast provides encouragement for revenue managers and hotel owners. Properties with strong group business, effective pricing strategies, and exposure to higher-spending travelers are likely to benefit most from the improving market conditions.

Source: CoStar

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