US hotels navigate an uncertain second half of 2025

Slowing deals, shifting traveler habits, and shrinking margins test the resilience of the hospitality sector

As the US hospitality industry moves into the second half of 2025, hotels are confronting a convergence of economic caution, evolving traveler behavior, and tightening margins. While consumer interest in travel remains high, shifting economic conditions — including inflation, high interest rates, and slower deal activity — are prompting a reassessment of strategies across the sector. From luxury resorts to midscale chains, operators are being forced to adapt to cost-sensitive travelers, stalled investment cycles, and global uncertainties.

Key takeaways

Slower M&A activity amid uncertainty

• Hotel deal-making has decelerated significantly in early 2025.
• Investors are hesitant due to tariff fluctuations and an unpredictable economic outlook.
• Owners are holding off on staffing and expansion decisions.

Consumer travel behavior is changing

• 83% of Americans plan to travel in the next year — but 80% will adjust how they do it.
• Trends include shorter trips, more domestic travel, and cheaper transportation.
• Rising prices and job insecurity are reshaping leisure travel preferences.

Margin pressures, especially for midscale and budget hotels

• RevPAR has declined in most segments, except for luxury and upper-upscale.
• Price-sensitive travelers are seeking better value, squeezing lower-tier operators.
• Analysts recommend targeted incentives over deep discounts to protect brand value.

4. Drop in international tourism adds to pressure

• Inbound travel from key markets like China is down over 11% year-on-year.
• Destinations reliant on long-haul visitors face added recovery challenges.

5. Stabilization may begin in 2026

• Economic and policy uncertainties will likely weigh on the industry through 2025.
• Some stability could return by 2026, depending on broader market conditions.

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