The US hotel industry is experiencing a decline in performance, driven by reduced international visitor numbers and heightened volatility in consumer and business confidence, according to analysts at Truist Securities.
The slowdown is expected to persist through the remainder of 2025, impacting major hotel operators and short-term rental platforms.
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In a note released Friday, Truist analyst C. Patrick Scholes downgraded Airbnb’s stock rating from ‘hold’ to ‘sell’, citing underwhelming summer travel trends in both the US and Europe.
He revised the price target for Airbnb shares from $112 to $106, suggesting a potential 17% drop from Thursday’s close. Airbnb shares declined 0.7% following the announcement and have lost 3% of their value so far this year.
Hotel bookings soften amid middle-class spending pressure
Analysts based their assessment on millions of US hotel booking records and conversations with industry leaders.
They concluded that a combination of weaker middle-class leisure travel, government contract cutbacks, and less inbound international tourism is fuelling the decline.
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By GlobalDataThe trend appears more concentrated in midrange hotels, which typically serve government clients and cost-conscious travellers. Scholes and his team highlighted “middle-class leisure underperformance” as a key factor behind lower occupancy rates in these properties.
Premium chains are also affected, though to a lesser degree.
Major hotel stocks see price targets cut
Truist also lowered its price targets on several hotel companies.
Hyatt Hotels was reduced from $156 to $140, Choice Hotels from $144 to $128, DiamondRock Hospitality from $10 to $9, and Marriott International from $300 to $273.
These adjustments reflect growing concerns about sustained weakness in demand and its impact on earnings across the lodging sector.
Shares of all mentioned hotel companies posted small gains on Friday, but broader market trends indicate that investor sentiment remains cautious.
The Consumer Discretionary Select Sector SPDR Fund, which includes Airbnb, has fallen 4.4% in 2025.
Economic confidence volatility adds to travel sector uncertainty
The uncertain economic environment is amplifying pressure on the travel and hospitality industry. Analysts pointed to inconsistent business travel recovery and fluctuating consumer spending as additional challenges.
Despite post-pandemic reopenings, the anticipated rebound in hotel demand has failed to materialise at expected levels.
With inbound international travel still below pre-pandemic figures, the outlook for the US lodging sector remains clouded.
Truist forecasts that without a significant shift in economic confidence or international visitor numbers, softness in the market may persist well into next year.
