The pace of mergers and acquisitions in the US hotel industry has slowed in the first half of 2025, as economic uncertainty prompts caution among investors.
Ongoing concerns over fluctuating tariffs and shifting trade policy have contributed to a lack of conviction among potential buyers. This has created a holding pattern in the hospitality sector, with some hotel owners opting to pause major decisions around expansions and staffing.
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Although some deals are still progressing — such as Noble Investment Group’s recent acquisition of 16 Woodspring Suites in two separate transactions — overall deal volume has declined.
Industry analysts note that this pattern reflects wider hesitation across the economy, with many businesses opting for a ‘wait-and-see’ approach.
According to Bernard Baumohl, chief global economist at The Economic Outlook Group, firms are not currently engaging in significant hiring or capital expenditures, but are also not making large-scale cutbacks.
Changing consumer travel behaviour amid inflation concerns
Despite a challenging economic backdrop, travel demand among American consumers remains resilient. However, inflation, high interest rates and concerns about job security are altering the way people choose to travel.
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By GlobalDataA recent report from MMGY Global revealed that while 83% of surveyed consumers still intend to travel in the next 12 months, 80% plan to modify their behaviour — opting for shorter trips, domestic destinations, and more cost-effective transport options.
Simon Moriarty, vice president of syndicated research at MMGY, noted that although consumer appetite for leisure travel remains high, the industry must be prepared for continued volatility.
Destinations and travel providers are being urged to adapt to these evolving behaviours and prioritise clear, value-driven offers. For destinations reliant on long-haul or international visitors, especially from countries like China, a fall in inbound tourism — already down 11.6% year-on-year as of March — may be particularly difficult to offset.
Hotel operators face margin pressures across chain scales
The financial strain on the US hotel industry is most apparent at the lower end of the market.
According to data from CoStar, revenue per available room (RevPAR) declined in April across most chain scales, with the exception of luxury and upper-upscale segments, which recorded modest growth.
Analysts suggest that tighter household budgets are pushing travellers to seek better value, which is reducing margins for midscale and budget hotel brands.
Baumohl warned that in a price-sensitive market, hoteliers will need to avoid aggressive discounting that could damage long-term competitiveness. Instead, offering temporary incentives — such as complimentary parking or breakfast — may help maintain guest loyalty.
However, clarity around these offers is essential to avoid customer dissatisfaction in future stays.
The ongoing shifts in travel trends, combined with persistent geopolitical and economic instability, present a complex landscape for the hospitality industry.
Experts suggest that while short-term challenges will continue to shape travel and hotel performance into late 2025, conditions could begin to stabilise by 2026 if broader economic indicators improve.
