CoStar, Tourism Economics downgrade US hotel forecast

Similar adjustments were made to the 2026 forecast: supply (-0.5% to +0.8%), demand (-0.3% to +1.1%), ADR (-0.7% to +1.3%) and RevPAR (-0.6% to +1.5%).

“Top-line performance is still growing even in the current environment,” said Amanda Hite, president of STR, which is part of the CoStar group. “Until consumer confidence improves, however, demand is going to remain softer — especially in the middle- and lower-price tiers.”

However, ADR is projected to keep growing, Hite said.

“Rate is pushing the top line in the group segment, and business transient should continue to recover in a lot of industries, but leisure gains are going to be more isolated,” Hite said. “Our forward-looking data continues to support the observations of many industry stakeholders that booking windows have shortened. That adds to the challenges hoteliers will face in the coming quarters.”

The projection for gross operating profit per available room (GOPPAR) was also lowered by $3 for 2025.

“We’re looking ahead to a second half of the year with consumers facing higher prices and a weaker labor market, businesses tapping the brakes on investment, and soft international visitor volumes,” said Aran Ryan, director of industry studies at Tourism Economics. “While recession risks have eased, the economy — and the travel sector — will walk on a tightrope through this period.”

Hite said while general operating profit for hotels will still grow, several factors caused the forecast to be adjusted.

“While GOP growth will continue, the pace will be modest due to softer demand, rising departmental costs, and limited margin gains from ancillary revenues,” she said. “When adjusted for inflation, GOP is down from last year.”