The latest CBRE US Hotels State of the Union report reveals a modest recovery in hotel performance amid shifting economic conditions and rising competition from short‑term rentals.
CBRE trimmed its growth forecasts for 2025 and 2026 by approximately 0.5 percentage points, citing persisting consumer price pressures.
While employment expanded by 1.5% in April and wages rose by 3.8%—still above inflation—unemployment edged up to 4.2% and job openings per candidate declined.
These mixed indicators suggest households may sustain summer travel to some extent, but hotel profitability remains under threat as costs continue to escalate.
Hotel performance shows mixed signals
When adjusted for the timing of Easter, revenue per available room (RevPAR) rose a modest 0.4% in March and April, supported by a 1.5% increase in average daily rate (ADR) despite a 1.1% dip in occupancy.
Upscale properties led the field with a 2.9% RevPAR uplift, though half of U.S. markets underperformed.
Combined with corporate travel shifting later in the year, overall revenue growth slowed and operating margins saw a slight contraction year‑on‑year even as business travel improved during Easter.
Short‑term rentals continuing to outpace hotels
April marked another month of strong performance for short‑term rentals (STRs), with demand rising 6.0% compared to 0.1% for traditional hotels.
STRs now make up 13.7% of U.S. lodging demand; both their RevPAR and ADR have substantially outpaced 2019 levels, aided by nearly full occupancy rates.
Investors and hotel operators are paying close attention as STRs continue to divert guests and revenues.
Outlook: consumer savings may buoy travel
Rising disposable income and household savings—up 2.9% and 4.9% year‑on‑year in April—along with a rebound in stock markets and confidence, could support leisure and business travel this summer.
However, international inbound travel remains weak, offset by stronger outbound travel, and TSA passenger volumes dipped in May, hinting at potential softening later in the year .
CBRE’s snapshot suggests that while the U.S. hotel sector is navigating rising costs and competitive pressure from STRs, employment and consumer finances offer a buffer heading into peak season.
Still, subdued inbound travel and margin pressures point to a cautious road ahead for hotel operators through 2025.
