US hotel demand is losing momentum as major operators temper guidance, with ripple effects visible in the UK midscale and budget segments.

InterContinental Hotels Group (IHG) reported third-quarter global RevPAR growth of just 0.1% and a 1.6% decline in the United States, citing a tougher macro backdrop, while still meeting full-year expectations.

What the latest guidance says

Hilton trimmed its 2025 room-revenue outlook after a 2.3% US RevPAR drop in Q3, pointing to consumer caution and softer demand in midscale and economy hotels, even as luxury brands held up better and overall earnings beat forecasts. The company now sees full-year RevPAR roughly flat to up 1%.

In the UK, Premier Inn owner Whitbread signalled a challenging trading environment through 2025. The group reported lower half-year profit, weaker food-and-beverage sales and lingering cost pressure, and noted limited visibility, with shares falling on its October update.

Budget chain Travelodge described first-half trading as “challenging”, with softer UK demand—particularly in London—driving lower revenue and EBITDA versus last year, before conditions improved into Q3.

Dalata Hotel Group, which operates Clayton and Maldron, called the UK market “more challenging”, citing an H1 RevPAR decline of about 3.5% year on year.

Causes of the decline: where pressure is building

Across the US hotel market, operators point to softer leisure and cost-conscious domestic travel, slower midweek corporate demand, and cautious consumers responding to economic uncertainty—factors that disproportionately affect midscale and economy hotels.

Hilton’s commentary highlights that dynamic, with luxury occupancy and rates more resilient than the mass market.

In the UK, chains cite weaker London event calendars at times, rail disruptions, and persistent cost inflation, compressing margins even when occupancy holds up; Whitbread’s and Travelodge’s updates reflect those pressures.

A parallel supply-demand squeeze is also part of the story.

UK market tracking shows RevPAR slipping modestly in H1 2025 as cost inflation and new supply outpaced demand growth—conditions that often foreshadow pricing pressure in value segments and translate into selective discounting in comparable US markets when macro signals soften.

What the data says about the shape of the slowdown

The current US hotel slowdown is narrow and uneven rather than broad-based. IHG’s global RevPAR still eked out a gain, masked by a US dip, and Hilton’s luxury portfolio posted positive RevPAR while US midscale weakened.

This suggests a “two-speed” market: high-end demand supported by affluent travellers and international trips, versus softer domestic, price-sensitive segments.

In the UK, listed operators report pressure concentrated in budget and F&B-exposed assets, with events-led peaks helping but not fully offsetting weekday softness.

Implications for owners, brands and investors

For US hotel owners, the guidance points to tight revenue management and cost control as priorities through late 2025: protecting rate where possible, sharpening distribution to higher-yield channels, and calibrating sales efforts toward resilient segments (luxury, group, and select international inbound).

In midscale and economy, the near-term risk is ADR erosion to sustain occupancy; brands’ comments imply greater performance dispersion by sub-brand and location.

Pipeline strategy remains a swing factor. Hilton still expects net unit growth of roughly 6.5%–7% in 2025, indicating confidence in long-term US demand and development economics, even as near-term RevPAR guidance softens.

Owners weighing conversions and limited-service builds should stress-test deals for slower RevPAR growth and higher operating costs.

In the UK, operator updates are a timely reminder for global investors that cost inflation and labour pressures can outstrip modest RevPAR gains.

Portfolio moves—such as Whitbread’s restaurant-to-rooms strategy—underscore a shift toward assets with stronger accommodation cash flows and fewer F&B headwinds; US owners with similar exposure may consider re-mixing space, tightening menus, or accelerating select-service formats to defend margins.

The takeaway

The “hotel industry outlook 2025” for the US is cooler but not collapsing.

Expect a slower, segmented market in which luxury and destination-led demand outperform, while “us hotel demand”, “revpar”, “occupancy rates” and “average daily rate (ADR)” in midscale and economy likely face intermittent pressure.

Guidance from IHG and Hilton, coupled with softer UK read-throughs from Whitbread, Travelodge and Dalata, points to disciplined pricing, targeted sales to resilient demand pools, and selective development as the playbook until macro conditions brighten.