Study shows steep decline in federal hotel demand

The high-dependency and high-volume Washington, D.C., market is taking the biggest hit with a 20% YTD drop in government per-diem bookings and a 44% decline in 30-day future government per-diem bookings through April 4.

“Federal policy is reshaping travel patterns in ways that directly impact business planning and hotel profitability. We have always seen muted travel growth during times of economic uncertainty and the duration and extent of the disruption is not yet known,” said Cindy Estis Green, co-founder and CEO of Kalibri Labs. “However, to navigate this evolving landscape, commercial teams need a granular, real-time view of demand. Precision—not broad targeting—will define the winners in today’s hospitality market. Consumers and businesses will always return to traveling, but the short-term decisions made to manage this turbulent period are critical as they can affect long-term hotel results for years to come.”

Kalibri studied performance data from over 35,000 hotels from January 2024 to early April 2025. The study reveals the current impact of federal funding changes and macroeconomic uncertainty on the U.S. hotel industry. 

Overall, the study found that U.S. hotel markets are showing mixed performance. Of the 334 markets in the study, 53% saw YTD declines of up to 22%, while 47% remained flat or improved. Total U.S. room night volume is down 1% year-over-year, with future bookings pacing 4% below 2024.

According to Kalibri, the findings underscore mounting pressure on hotel performance, particularly within the government and corporate travel segments. The data has significant variations by segment, chain class and location, indicating that while some markets demonstrate resilience, most are experiencing notable contractions — both in government bookings and broader rate categories.

The study noted 137 growth markets where demand rose between 1% and 31% YOY, with top performers including Valdosta, Georgia; Asheville, North Carolina; Spartanburg, South Carolina; Abilene, Texas; and Midland, Michigan. It also noted 22 markets that showed significant declines between 10% and 22%, including Wichita Falls, Texas; Atlantic City, New Jersey; Bowling Green, Kentucky; Greensburg, Pennsylvania; and Niagara Falls, New York.

Among the 334 markets, approximately one-third have bookings that are higher than 2024 levels for the upcoming 30-day period, with future bookings ranging from 1% to 63% higher than 2024. At the same time, almost two-thirds reflect future reservations that are below 2024 levels, with deficits ranging from -1% to 48% compared to 2024. Underperforming markets include Branson, Missouri; Greensburg, Pennsylvania; the Texas West Area; Missoula, Montana; Wilmington, Delaware; and Bloomington, Illinois.

Government-related travel down

The study found that government-related travel has been disproportionately affected by all the demand segments, with actual transient per diem bookings down 9% YOY. Corporate transient travel (actual) has also declined by 4% YOY. In addition, the outlook for both segments remains negative, with 30-day future bookings pacing down 20% for government and 4% for corporate travel compared to last year. 

More than 76% of all U.S. markets experienced a year-over-year decline in actual room night demand for transient per-diem government business through early April 2025. However, 39 markets recorded growth of 10% or more compared to the corresponding period in 2024. Some of the more significant shifts can be attributed to unusual weather events, natural disasters or other anomalous regional events like the Presidential Inauguration. When looking at future bookings, 76 markets appear to have growth in their future bookings of 10% or greater than the corresponding period in 2024 while 231 of the markets are showing a decline.

For top-volume or government-reliant markets, most markets have experienced YOY declines in both performance and bookings 30 days into the future. Washington, D.C., has a 20% decline YOY and a 44% decline for 30-day bookings. The Hawaiian Islands (-27%) and Las Vegas (-13%) reported similar downward trends for YTD government room nights while Los Angeles posted gains, most likely from disaster-related activity.

Santa Fe, New Mexico, and Huntsville, Alabama, faced the most significant YTD losses of 34% and 28% for government-reliant markets, respectively.

Hotel performance varies widely across chain classes, with economy and midscale properties experiencing a 1% to 3% drop in actual demand, upper midscale hotels reporting a 1% decline, and upper-tier hotels posting flat to slightly negative performance. Purpose-built extended stay brands, both lower and upper tier, are showing relative strength.