NATIONAL
REPORT — Uncertainty across the broader U.S. economy continues to weigh on
hotel performance and is fueled by a confluence of contradicting factors, which
is driving the Lodging Analytics Research & Consulting (LARC) to project a
RevPAR decline for 2025 and a more modest RevPAR gain for 2026.
LARC is projecting 2025 RevPAR to decrease by 0.5%, driven by a 0.9% ADR increase and a -1.4% occupancy decline. In 2026, LARC projects a 1.2% RevPAR increase, driven by a 2.1% increase in ADR and a -0.9% decline in occupancy.
While the World Cup is expected to help several markets in 2026 (and should also help inbound foreign travel numbers), LARC notes that most markets not impacted by the event will experience much softer performance.
“We continue to expect there to be U.S. lodging markets that materially outperform as well as those that underperform national averages. Over the medium-to long term, we expect markets with outsized exposure to high-end leisure transient and group to outperform,” said Ryan Meliker, president of LARC. “However, in the immediate term, those with strong convention calendars and World Cup exposure are likely to yield the most top-line growth.
“Furthermore, expense pressures will become a substantial factor in identifying markets that are winners and those that are losers, particularly with several major cities recently completing or soon to negotiate collective bargaining agreements. Recent finalized agreements in several U.S. cities have resulted in a roughly 10% annual increase in wages over the next five years and a reset back to pre-pandemic staffing levels. We expect non-union hotels to keep pace with wage growth at union properties across these markets, though many are already paying wages above union-mandated levels.”
This is a
marked decline from the 1.3% projection LARC had forecast in May and is
significantly lower than the 3.1% increase it projected for U.S. RevPAR at this
time last year. But the report’s broad consensus is still positive for the
future. Over the next five years, LARC expects hotel values to increase 5%.
LARC’s
industry outlook
2025
RevPAR projections: LARC expects U.S. RevPAR to decrease by -0.5% to $99.69, driven by ADR growth
of 0.9% to $160.44, while occupancy declines -1.4% to 62.1%.
2026
RevPAR projections: LARC expects U.S. RevPAR to increase by 1.2% to $100.90, driven by ADR growth
of 2.1% to $163.85, while occupancy declines by 0.9% to 61.6%.
2025
EBITDA: LARC
forecasts 2025 U.S. hotel EBITDA to decline -2.8% with margin erosion, and
hotel values to decrease -2%.
2026
EBITDA: LARC
forecasts U.S. hotel EBITDA to remain unchanged, with slight margin erosion,
and hotel values to increase 2%. Over the next five years, LARC expects hotel
values to increase a total of 5%.
2025 top
markets for RevPAR growth: San Francisco; Palm Beach, Florida; St. Louis, Missouri; Columbus, Ohio
and Pittsburgh.
2025
bottom markets for RevPAR growth: Houston; Memphis; Las Vegas; Austin and Savannah, Georgia.
2026 top
markets for RevPAR growth: Maui; Miami; New York, Philadelphia and Palm Beach, Florida.
2025
bottom markets for RevPAR growth: Pittsburgh; Kauai, Hawaii; St. Louis; Fort Lauderdale,
Florida and Tampa, Florida.
5-YEAR
OUTLOOK (2024-2029)
Top
markets for RevPAR growth: Maui; Palm Beach, Florida; Orlando, Florida; Raleigh, North Carolina and
Los Angeles.
Bottom
markets for RevPAR growth: Houston; Louisville, Kentucky; Fort Lauderdale; Washington, D.C. and
Pittsburgh.
Top
markets for value change: Orlando; New Orleans, Louisiana; Tampa; Charlotte, North Carolina and
Puerto Rico.
Bottom
markets for value change: Austin; New York; Chicago, Washington, D.C. and Dallas