CBRE Forecasts Modest Growth in Hotel Revenue for 2025, Driven by Urban Centers

CBRE projects modest growth in hotel revenue per available room (RevPAR) for 2025, led largely by urban markets and regional leisure destinations.

2025 Revenue Forecasts

CBRE anticipates a 1.3% rise in RevPAR for 2025, slightly softer than their February forecast of 2.0% growth. This estimate is based on a 14 basis point (bps) increase in occupancy and a 1.2% year-over-year rise in the average daily rate (ADR).

The firm’s forecast also considers a predicted 1.4% GDP growth for this year, which is a decrease from the February forecast of 2.4%. A 2.9% average inflation rate is also expected for 2025, marking a 40 bps increase from the February prediction. Despite slower economic growth predictions, CBRE remains optimistic about the lodging industry’s performance.

Factors Influencing RevPAR Growth

Several factors are expected to drive RevPAR growth in 2025. An uptick in group and business travel, a weaker U.S. dollar and lower airfares will likely encourage domestic travel while boosting inbound international visitation. These conditions notably benefit urban hotels, regional resorts and drive-to destinations.

CBRE’s Head of Hotel Research and Data Analytics, Rachael Rothman, expects RevPAR growth to be between 1.0% and 3.0% over the next few years. Major events like the 2026 FIFA World Cup, the 2028 Summer Olympics, and the unveiling of new attractions like a theme park in Orlando are expected to stimulate demand and maintain growth momentum, unless a sudden economic downturn occurs.

Supply Growth and Market Outlook

While economic growth and hotel demand are expected to slow soon, supply growth is also projected to decelerate due to increased construction costs, higher financing rates and a tight labor market. Michael Nhu, Senior Economist and CBRE’s Head of Global Hotels Forecasting, expects supply growth to average at 0.8% annually over the next four years, which is half of the industry’s historical average.

CBRE added 11 new leisure-oriented markets in its latest forecast, including Boulder and Colorado ski markets, California wine country, the Florida Panhandle, and Utah national parks. These additions reflect recent shifts in travel trends and provide insights into emerging opportunities.