NATIONAL REPORT – The headlines may not be pretty with TSA
snafus, war in the Middle East, a roller coaster stock market, FIFA cancelling
rooms and general lingering uncertainty, but some of the wise guys at ALIS have
been right so far – the U.S. hotel industry is outperforming early 2026
forecasts.
CoStar’s latest weekly data has continued a trend of
positive results with March 15-21 showing 67.7% occupancy (+2.7% YOY); ADR at $169.02
(+2.2% YOY); and RevPAR +4.9% YOU at $114.44.
The calendar set up is helping, but Truist Securities
published a note on Thursday stating they are “taking the over” on RevPAR
growth.
Based upon their analysis, forward trends look encouraging
with 2026 RevPAR growth for U.S. hotels continuing to look at least modestly
better than industry forecasts.
While it should not be a surprise at this point that the World Cup-aided June will be a very strong month, we see it tracking materially above industry expectations and secondly we see the months of July and September as real upside surprise months.
Truist Securities
Truist cited tailwinds from a very favorable holiday-timing
calendar in 2026 and easier year-over-year comps in 4Q26 following a government
shutdown-related pull-back in demand in 4Q25. It also sees group attrition
subsiding beginning in 3Q26.
“While overall summer and fall trends look very encouraging
in our ‘big data’ intelligence, we see the greatest RevPAR upside vs.
industry/company/consensus expectations with limited-service hotels,” Truist
wrote. “Additionally, while it should
not be a surprise at this point that the World Cup-aided June will be a very
strong month, we see it tracking materially above industry expectations and
secondly we see the months of July and September as real upside surprise months.”
Truist continues to forecast mid and upper-end U.S. hotels
RevPAR growth of +2% to 4% year-over-year (upper-end at or above this range)
and limited-0service at +0.5% to 2.5%. These growth rates are approximately
100-200 bps above what most industry forecasters and Wall Street consensus are
currently expecting.
For 2Q26, Truist is maintaining mid and upper-end U.S.
hotels RevPAR forecast of +3.5% to 5.5% and limited-service at +1.5% to 3.5%.
These ranges are above consensus expectations, especially limited-service.
World Cup-driven June is tracking materially higher than industry expectations.
The FIFA World Cup will take place from June 11 through July
19 across 11 U.S. host cities and Truist suggested a wildcard to demand
(besides geo-political events) for hotels in host cities will be how much short-term
rental inventory (aka Airbnb) comes out of the woodwork for these events,
something it has seen occur at major events such as the Superbowl.
At the moment, transient customer RevPAR looks to be up low-to-mid single-digits for 2026 and reflecting the continuation of bifurcation/k-shaped trends the upper-end will be closer to up mid-single digits (we previously said low-to-mid single) year-over-year with the more mass-market customer closer to up low-single digits (we previously said flat-ish).
Truist Securities
Trust sees for the month of June overall U.S. RevPAR growth
materially above the approximate 1.5% to 2% growth that industry forecasters
are expecting, likely 2-3x this rate of growth, possibly higher.
It said strength is driven by individual leisure travelers
as group is surprisingly lethargic around this event.
Truist added that despite some reports in the media about
weak “actualized demand,” with the exception of New York City, they see it very
strong. “NYC is the one World Cup market where June occupancy is tracking down year-over-year.
This, we believe, is from NYC hotels pricing room rates much too aggressively,”
Truist wrote. “That said, RevPAR growth for this market for the month should
still be up in the teens year-over-year and even stronger for July when it
hosts the World Cup final and sees strong demand from the 250th anniversary.”
For 3Q26, Truist has introduced a forecast with mid and upper-end
U.S. hotels RevPAR at +4% to 6% and limited-service of +1.5% to 3.5% with July
and September especially strong. These ranges are above consensus expectations,
especially limited-service.
The transient customer segment, which is a combination of individual
business and leisure travel, is tracking to be the strongest grower in 2026
whereas the group customer, ex-any renovation tailwinds such as with Ryman
Hospitality, will be the relatively weakest customer. “At the moment, transient
customer RevPAR looks to be up low-to-mid single-digits for 2026 and reflecting
the continuation of bifurcation/k-shaped trends the upper-end will be closer to
up mid-single digits (we previously said low-to-mid single) year-over-year with
the more mass-market customer closer to up low-single digits (we previously
said flat-ish),” Truist said.
Beginning in 3Q, [group] attrition looks like it is subsiding and we are starting to see more actual reservations (bookings made by the conference attendees when they reserve with their credit cards as part of the group block) being booked than what was initially expected when the meetings/conference was originally planned.
Truist Securities
Group attrition continues through 1H26, according to Truist,
but should turn a corner in 3Q26. “For the first half of the year we observe group
block revenue pace tracking up mid-single digits year-over-year but because of
attrition (meaning not as many attendees showing up as initially planned when
the meetings/conferences were originally booked, something that plagued the
industry for most of 2025), final group revenue growth will likely be closer to
up low-single digits,” Truist wrote. “However, beginning in 3Q attrition looks
like it is subsiding and we are starting to see more actual reservations
(bookings made by the conference attendees when they reserve with their credit
cards as part of the group block) being booked than what was initially expected
when the meetings/conference was originally planned (the “initial group
block”). For 3Q, the group block revenue pace is tracking up low-single digits
but actual credit card bookings coming-in point to group revenues tracking
closer to up mid-single digits, a flip from the previous trend.”
Truist send the group trend is flipping due to a combination of lapping last year’s
acceleration in attrition, much of that due to DOGE cutbacks and deceleration
of international in-bound (international accounts for approximately 5% of U.S. group/convention
attendees and that customer was down by 50%) and meeting planners being
slightly more conservative with their initial expectations for attendance
following last year’s uptick in attrition.
Truist said it sees final 2026 group revenue pacing closer
to up mid-single digits and roughly in-line with what companies noted at 4Q25
earnings in February/March (note that company expectations for 2026 group
revenues have declined with each subsequent quarterly update).
On the leisure said at full-service resorts, Truist said
that based on data from resort analytics company Inntopia/DestiMetrics through February
28 which looks at forward RevPAR at hotels at western U.S. ski resorts, the
summer looks very encouraging.
May through August on-the-books occupancy is up 3.9% year-over-year,
ADR is up 7.9%, and revenues are up 12.1%. The +12.1 year-over-year revenue
gain is higher than any time since the post-pandemic bounce, according to
Truist.
Truist Securities believes such strength is helped by hotels
at western U.S. ski resorts, these typically being higher-end types of
properties, being beneficiaries of the better-side of the K-shaped economy.