U.S. hotels may be slipping into an industry-specific recession

How weaker demand and pricing trends expose vulnerability in lodging’s growth model

In a context of modest GDP growth, U.S. hotels are showing signs of distress: revenue per available room (RevPAR) growth is nearly flat and average daily rate (ADR) gains are barely keeping up with inflation.

Key takeaways

• Disconnection from macro growth: overall U.S. GDP continues to grow, but hotel performance is lagging behind, suggesting a divergence between general economic momentum and the lodging sector.
• Flat to weak pricing power: ADR growth is just ~1 % year to date, and in many submarkets rates are failing to keep pace with inflation.
• RevPar growth nearly stalled: year-to-date RevPAR is up only 0.2 %, one of the weakest showings outside a formal recession.
• Indicators of a lodging recession: hotel analysts propose that two consecutive quarters of RevPAR deceleration could qualify as a “hotel recession,” and current trends are pushing close to that threshold.
• Uneven market performance: only about 22 % of U.S. hotel submarkets saw ADR growth at or above inflation in August, highlighting broad underperformance across regions.
• Outlook clouded by external risks: seasonal headwinds (e.g. hurricanes), weak demand signals, and further rate pressure could intensify the downturn ahead.

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