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Global Hotel Market Braces for Economic Shifts and Tax Hikes in 2026 – Image Credit Unsplash
According to a recent LinkedIn post by STR, the global hotel market is navigating a complex landscape as it enters 2026, with regional forecasts shaped by economic conditions, tax changes, and significant events such as the 2026 World Cup. While some regions anticipate growth, others face challenges due to fiscal policies and macroeconomic uncertainties.
European Market Dynamics
In Europe, the hotel market’s short- and medium-term RevPAR (Revenue Per Available Room) projections remain stable across 31 forecast markets. The region is expected to close 2025 with a 1.1% RevPAR growth, a slight improvement from the 0.7% forecast in August. However, growth is anticipated to slow to 0.5% in 2026.
A significant development in the European market is the trend of VAT hikes, particularly in the Netherlands. Starting January 2026, the hospitality VAT rate will increase from 9% to 21%. This change has led to a downgrade in Amsterdam’s 2026 outlook, with RevPAR projected to decline by 5.6%. Other cities, such as Vienna and Edinburgh, are also implementing new taxes, which are affecting their respective forecasts.
UK Market Stability Amid Economic Pressures
The UK market remains stable, with London’s RevPAR expected to rise by 0.7% in 2026 and Regional UK by 1.0%. This stability is attributed to slow GDP growth, pressure on real wage growth, and slower-than-anticipated interest rate cuts. These factors have influenced household income and spending, maintaining a cautious outlook for the UK hotel industry.
Asia Pacific: A Mixed Bag
In the Asia Pacific region, RevPAR is projected to grow by 1.4% in 2025 and 2.7% in 2026, driven by favorable holiday shifts in China. The region’s performance has stabilized, with China leading the way. Despite this, Guangzhou’s RevPAR growth has been downgraded due to increased supply and slowing occupancy growth.
Hong Kong SAR stands out with a significant RevPAR upgrade, driven by improvements in both occupancy and ADR. The region benefits from Chinese outbound travel, with a preference for shorter-haul trips.
Middle East: Continued Optimism
The Middle East hotel market continues to outperform expectations, with projected RevPAR growth of 9.8% in 2025 and an optimistic 1.6% increase in 2026. The UAE markets, particularly Abu Dhabi and Dubai, are expected to perform well due to rising international arrivals and a more sedate development pipeline.
However, Saudi Arabia faces challenges with its ambitious Vision 2030 plans, which may inhibit short- and long-term RevPAR growth due to the high level of new development.
US Market: Cautious Optimism
In the United States, the hotel market faces a cautious outlook for 2026. RevPAR has been downgraded to 0.5%, with moderate growth expected in both demand and ADR. The first quarter of 2026 is anticipated to see a decline, marking four consecutive quarters of year-over-year RevPAR decreases.
Despite these challenges, the 2026 World Cup, hosted across the US, Canada, and Mexico, is expected to boost the US hotel industry. The event will provide a modest demand lift and a noticeable impact on ADR, particularly on the upper-end scales.
Conclusion
Overall, the global hotel market is poised for a mixed year in 2026. While some regions anticipate growth driven by events and stabilized performance, others face challenges from economic pressures and tax changes. The industry’s ability to adapt to these dynamics will be crucial in navigating the year ahead.
