U.S. hotel sector closes 2025 with uneven performance

Stabilization replaces post-pandemic rebound as demand, costs, and capital markets reset

The U.S. hotel sector ends 2025 in a phase of normalization rather than growth acceleration. Performance has stabilized after several volatile years, but results vary sharply by segment, market, and demand mix. Leisure-oriented destinations and higher-end properties continue to outperform, while business- and group-dependent hotels face slower recovery. Elevated operating costs, cautious corporate travel, and tighter capital conditions are shaping a more disciplined and selective industry outlook.

Key takeaways

• Modest national performance growth: Occupancy and RevPAR trends remain flat to slightly positive, reflecting stabilization rather than a broad-based rebound.
• Leisure demand remains the primary support: Domestic leisure travel continues to underpin weekend and resort performance, particularly in secondary and drive-to markets.
• Business travel recovery remains incomplete: Corporate and group demand has improved selectively but remains below pre-pandemic levels, especially in urban and convention-centric markets.
• Persistent cost pressures: Labor, insurance, utilities, and financing costs continue to weigh on profitability, forcing operators to focus on margin management rather than topline growth.
• Luxury and upper-upscale outperform: Higher-end properties benefit from resilient affluent travel demand and pricing power, widening the performance gap versus midscale and economy segments.
• Regional performance divergence: Sunbelt and leisure-oriented markets generally outperform gateway cities and internationally dependent destinations.
• Cautious investment and dealmaking: Transaction activity has picked up selectively, but pricing discipline and conservative underwriting dominate investor behavior.
• Operational discipline over expansion: Owners and operators prioritize efficiency, technology adoption, and cost control as growth expectations reset heading into 2026.

Source: CoStar, Hotel Dive

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