Global hotel performance has taken a mixed turn in the second half of 2025.
According to CBRE’s latest Global Hotel Outlook, the industry’s post-pandemic recovery has slowed in some markets while others continue to grow, driven by tourism demand and regional economic resilience.
RevPAR (revenue per available room), the key performance indicator for hotels, remains uneven across regions.
US hotels face slowing growth amid rising costs
The United States hotel market is experiencing a notable slowdown.
CBRE now forecasts just 0.1% RevPAR growth for 2025, a sharp cut from its earlier projection of 1.8%. Despite a strong economy earlier in the year, occupancy has declined for four consecutive months, and average daily rates (ADRs) are beginning to weaken.
Persistent trade tensions, high inflation and a surge in short-term rental supply have combined to squeeze hotel margins. The consultancy expects RevPAR to fall by 0.6% in the second half of 2025, pushing annual performance to its weakest level since the pandemic recovery began.
Luxury and urban hotels have fared better, supported by strong loyalty programmes, yet even these segments remain below pre-Covid levels.
The sector faces further pressure from tariffs, higher operating costs and a cautious consumer environment. Analysts warn that hotel profit margins could shrink for a third straight year.
Tourism drives gains in Canada, Latin America and Europe
While the U.S. market struggles, Canada’s hotel industry continues to expand.
CBRE projects 2.4% RevPAR growth this year, fuelled by steady domestic travel and resilient US inbound demand. Average daily rates have held above $200, and occupancy levels remain near historical highs.
Further south, northern Latin America is enjoying a strong tourism rebound. Mexico, Costa Rica, Colombia and the Dominican Republic have each reported solid visitor growth and hotel development activity. Mexico alone welcomed over 15 million international tourists in the first four months of 2025, while the Dominican Republic aims for 12 million visitors by year-end.
These markets are benefiting from greater air connectivity and sustained investment in new hotels.
Across Europe, international travel remains on an upward trend. CBRE notes a 2.8% year-to-date rise in RevPAR, supported by higher occupancy and more stable pricing. However, growth has slowed compared with last year’s surge, with 2025 RevPAR expected to climb between 2% and 5%.
Markets such as Greece, Spain and Italy continue to perform well, while the UK and Germany are seeing project delays amid construction cost pressures.
Strong performance continues across middle east and Asia-Pacific
The Middle East hotel sector remains a bright spot.
The United Arab Emirates has led regional growth, with Dubai welcoming nearly 10 million international visitors in the first half of the year — a 6.1% increase.
Abu Dhabi has also seen a jump in RevPAR thanks to new leisure attractions and major exhibitions. Saudi Arabia’s hotel market shows mixed results, with gains in Makkah and Madinah offset by weaker demand in Jeddah and Riyadh.
In Asia-Pacific, hotels are benefiting from a continued rise in travel. The region recorded a 9% increase in international arrivals (excluding mainland China) during the first half of 2025.
Japan has been the standout performer, posting a 17% jump in ADR, while Korea and Vietnam have also enjoyed solid gains. Mainland China, by contrast, is facing weaker domestic consumption and stagnant room rates.
Despite variations across markets, the Asia-Pacific region continues to be a growth engine for global hospitality, supported by improved air connectivity and strong regional tourism.
The outlook for the rest of 2025 suggests a period of stabilisation rather than expansion.
Global hotel operators are contending with inflation, high labour costs and the steady rise of short-term rentals. Yet the sector’s resilience remains evident in regions where tourism is thriving and long-term investment continues.
