INTERNATIONAL
REPORT — Despite a stronger-than-expected economy through mid-2025, U.S. hotel
performance has stalled. Year-to-date through July, RevPAR inched up just 0.4%
as occupancy fell for four consecutive months. Historically, such declines
precede ADR softening and CBRE said it now expects RevPAR to contract 0.6% in
the second half of the year — bringing full-year growth to a negligible 0.1%,
well below its earlier 1.8% forecast, according to CBRE’s H2 2025 Global Hotel
Outlook.
The slowdown
mirrors broader economic concerns. CBRE trimmed its U.S. GDP growth forecast to
1.5% for 2025, citing elevated interest rates, ongoing trade tensions and
geopolitical uncertainty. Inflation is expected to remain stubborn at 2.9%,
while weak disposable income growth and cautious consumer sentiment further
weigh on travel demand.
After
substantial RevPAR gains in late 2024 and early 2025, the market cooled sharply
in Q2. Contributing factors include a slow 0.5% rise in foreign arrivals,
weaker convention and business travel, government layoffs and a 5.3% jump in
short-term rental supply. Hotels also face rising operating costs, labor
shortages and intensifying competition from alternative lodging, which is
pressuring margins for a third straight year.
Chain-affiliated
hotels continue to outperform independents, buoyed by loyalty programs that
have grown at a 12% annual rate since 2019. Still, brand proliferation has
diluted this advantage. Luxury and urban hotels are leading the growth,
although urban properties remain below their pre-pandemic levels.
Looking
ahead, the outlook remains cautious. Flat government per diems, inflationary
pressures and potential job losses could further limit demand, particularly
among lower-priced segments that surged due to hurricane-related travel last
year.
CBRE expects
San Francisco, Orlando, and San Jose to lead in RevPAR growth through 2026,
driven by major conventions, special events, and new attractions, such as
Orlando’s upcoming theme park. Memphis, Austin and New Orleans are forecasted
to lag. While hotel fundamentals are expected to strengthen next year with the
World Cup and the nation’s 250th birthday, top-line growth is likely to remain
below inflation. With supply growth averaging just 0.7% through 2028, the
recovery has clearly matured. Operators must stay vigilant on costs while
maintaining service quality: optimizing channels, enhancing guest experiences,
repurposing underused spaces, and protecting review scores amid mounting
competitive pressure.
Region-by-region
Canada: Canada’s hotel market is stabilizing
in 2025, with RevPAR forecast to rise 2.4% to $138 amid balanced supply and
demand. Occupancy remains near peak levels, while ADR exceeds $200 after
substantial recent gains. Despite trade tensions and economic uncertainty, U.S.
inbound travel and steady business demand continue to support performance.
CALA and
Latin America: Northern Latin America’s tourism sector is surging in 2025, led by Mexico,
Costa Rica, Colombia and the Dominican Republic. Mexico welcomed 15.6 million
international tourists through April, while the Dominican Republic saw over 4
million visitors and continues major hotel expansion. Colombia’s arrivals rose
6.6% year-over-year, and Costa Rica remains a favorite for luxury and
eco-tourism, despite experiencing early softness. Hotel development remains
robust, with Mexico and the Dominican Republic leading large-scale projects
that will add thousands of new rooms through 2026. Strong air connectivity, stable
economies, and rising investment are fueling momentum, positioning the region
as a growing global tourism powerhouse.
Europe: Europe’s tourism recovery remains on
track in 2025, with international arrivals and air travel volumes up roughly 5%
YOY. The U.S. continues to drive demand, while travel from China is rebounding
more slowly, with expectations now that it will reach pre-pandemic levels in
2026. Year-to-date RevPAR is up 2.8%, supported by stronger occupancy and
steadier ADR growth. Markets such as Greece, Italy, Spain and France are
experiencing moderate rate gains and stable occupancy, indicating a shift
toward sustainable growth. Budapest and Warsaw continue to outperform
expectations. However, hotel development pipelines in the U.K. and Germany have
slowed, while Ireland, Poland, and Portugal show modest expansion ahead.
Middle
East: The Middle
East’s tourism sector delivered a strong first half of 2025, led by robust
performance in the UAE. Abu Dhabi posted the most significant YOY RevPAR gain,
supported by a busy exhibition calendar, new attractions, and the success of
Etihad’s Stopover program offering free hotel stays. Dubai welcomed nearly 10
million international visitors in the first half of 2025, a 6.1% increase YOY,
putting it on track for a record year. With ongoing airport expansion and
global connectivity, Dubai is positioning itself among the world’s top three
destinations. In Saudi Arabia, RevPAR rose across most markets, though Jeddah
and Riyadh softened amid shifting corporate demand and fewer major events.
Asia
Pacific: Asia
Pacific’s tourism recovery gained momentum in the first half of 2025, with
international arrivals (excluding mainland China) up 9% YOY. Japan, Vietnam,
and Korea led the surge, while the Pacific Asia Travel Association projects 692
million total arrivals this year. Rising tourism has bolstered hotel
performance across the region, with ADRs climbing and occupancy strengthening.
Japan saw a 17% ADR jump amid record inbound travel, and Korea rose 6.3% on
steady demand. Singapore’s ADR softened with new supply, while Australia
stabilized after substantial post-pandemic gains. RevPAR growth is expected to
be strongest in Japan, Korea, Vietnam, and India this year.