Escalating Trade Tensions Trigger Record Drop in US Hotel Bookings

• The US hotel industry is facing a significant downturn due to a sharp decline in summer travel bookings, particularly from Canada, amid rising economic instability attributed to volatile tariff policies and geopolitical tensions.
• Industry advisory firm Lodging Analytics Research & Consulting (LARC) has refrained from publishing an updated forecast for the US hotel industry, citing “unprecedented uncertainty” within the economic and political environment.

Mohamed Dabo writes in his take on recent economic developments that the US hotel industry is grappling with a significant downturn as fresh data reveals a precipitous decline in advance hotel bookings for the summer, especially those from Canada. This slump is linked to volatile tariff policies and escalating geopolitical tensions, which are undermining confidence in the travel and hospitality markets. Specifically, advance bookings from Canadian travelers have plummeted by over 70% compared to the previous year.

This drastic dip aligns with a broader decline in consumer sentiment, which has seen a 23% reduction year-to-date, mirroring growing concerns about the trajectory of the US economy. Amid such volatile economic signals, Lodging Analytics Research & Consulting (LARC), a leading industry advisory firm, has decided not to release an updated forecast for the US hotel sector. This unusual step reflects the “unprecedented uncertainty” marking the current economic and political scenario.

The recent revision of the US GDP forecast for 2025 by Moody’s Analytics from 2.3% to 1.3%, as well as a 15% fall in the S&P 500 index so far this year, has increased pressure on sectors that depend on consumer spending and international travel. In particular, strained relations between the US and Canada, fueled by recent policy shifts and rhetoric from Washington, have contributed to the fall in travel demand. The sudden drop in bookings from Canadian tourists, who constitute a significant segment of the US hotel market, is anticipated to have a notable economic impact during the summer.

Experts point to the recent tariff hikes and absence of clear guidance from the US administration as major contributors to the prevailing uncertainty. This lack of predictability, particularly surrounding trade negotiations with major partners like Canada, presents challenges for businesses planning for the months ahead.

The combination of falling markets, reduced GDP expectations, and declining consumer confidence is expected to impact various travel and hospitality industry sectors. Recovery could be slow and uneven without a clearer policy framework and stabilizing economic signals. Consequently, firms like LARC are refraining from future projections, highlighting the unpredictable nature of the current environment. Once buoyed by steady cross-border travel and consumer spending, the US hotel industry may now be facing one of its most difficult periods in recent history.