US hotel outlook dims as growth lags and costs rise

Persistent inflation, weaker demand, and short-term rental competition weigh on margins and occupancy

The latest CBRE dustry outlook shows that while consumers still have spending power and business sentiment is steady, hotels face ongoing headwinds from soft GDP growth, sticky inflation, rising costs, and declining inbound travel. Alternative accommodations continue to capture share, squeezing occupancy and RevPAR even as luxury properties hold up better.

Key takeaways

• Economic outlook: GDP growth forecasts for 2025–2026 remain below the long-term average, with inflation expected to stay elevated, pressuring hotel profits.
• Consumer spending: Wage growth is outpacing inflation, but RevPAR is declining as domestic demand is cannibalized and inbound international travel weakens.
• Financing trends: CMBS issuance fell sharply year-over-year, with smaller loan sizes and fewer deals as higher rates dampen activity.
• RevPAR performance: August data shows continued year-over-year declines, driven by weaker occupancy, though luxury hotels are still seeing gains.
• Short-term rental competition: STR demand rose 3.6% in July while hotel demand fell 0.3%, with STR RevPAR up 6% year-over-year.
• Profit margins: Rising operating costs continue to outpace revenue growth, driving profits down 2.7% in June and likely to pressure margins through 2026.
• Travel patterns: Inbound international travel fell 3.1% year-over-year in July, while outbound travel rose 6.6%, reinforcing an imbalance that hurts U.S. hotel demand.
• Forward signals: TSA throughput and Google searches for corporate and redemption travel rose in August, suggesting potential improvement in fall travel demand.

Get the full story at CBRE