U.S. hotel industry grapples with declining RevPAR, while global markets show varied performance
Overview of U.S. Hotel Market Performance
The U.S. hotel industry experienced a challenging start to July 2025, as revenue per available room (RevPAR) decreased by 3.7% for the week ending July 12, following a 1.1% decline the previous week. Weekday performance, typically indicative of business travel trends, showed the most significant drop, while weekend performance, often associated with leisure travel, remained relatively stable.
Since Memorial Day, weekdays have consistently underperformed compared to weekends, highlighting a weak business travel environment. Although leisure travel has been stronger, it is also facing challenges from economic concerns and increased international travel.
Impact of Alternative Accommodations
Despite an increase in TSA passenger screenings, hotel demand has decreased, indicating a shift toward alternative accommodations, such as short-term rentals, cruises, and camping. This trend is particularly pronounced during the summer, a peak season for these types of accommodations. The imbalance in international travel, with more Americans traveling abroad than international visitors coming to the U.S., further complicates the situation for the hotel industry.
Group Business and Chain Scale Performance
Group business demand in the U.S. has been weak, with Luxury and Upper Upscale hotels experiencing a 9.8% year-over-year decline in demand. However, the average daily rate (ADR) for group bookings increased by 3.6%, remaining above inflation rates since Memorial Day.
RevPAR declines were observed across all U.S. chain scales, with Luxury hotels dropping 2.0% and Economy chains retreating 5.0%. The more business-focused Upper Upscale chain hotels saw the largest weekday RevPAR decline at 7.6%.
Regional Market Highlights
Among the Top 25 U.S. markets, St. Louis stood out with a 30.8% increase in RevPAR, benefiting from events like the General Conference of the Seventh-day Adventist. Other notable markets included Atlanta, which saw a 6% increase due to events like Beyoncé’s Cowboy Carter tour, and Chicago, with a 4.2% growth. Conversely, Houston faced a significant decline, selling 110,000 fewer rooms compared to the same period last year due to Hurricane Beryl’s impact.
Global Hotel Market Trends
Globally, RevPAR advanced by 2.2%, driven by a 3.2% increase in ADR, although occupancy slightly decreased. Japan led with a 22.1% RevPAR gain, while the U.K. and Canada also saw notable increases. Spain and Indonesia experienced growth, with RevPAR gains driven by ADR. However, some countries, including India, Germany, and France, faced declines due to various factors such as sporting event calendar shifts.
Future Outlook
Looking ahead, U.S. hotel demand is expected to peak in July, but it is likely to be lower than last year. The industry continues to face pressure from alternative accommodations, international travel, and economic uncertainties. While TSA passenger counts suggest Americans are still traveling, the shift towards other accommodation types is impacting hotel room nights.
Outside the U.S., global markets are expected to experience more typical seasonal and event-driven fluctuations. Overall, the U.S. hotel industry anticipates continued challenges in demand, ADR, and RevPAR for the remainder of the year and into 2026.
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