Growth Ahead, but Trade Tensions Cast New Shadows

• The global hotel sector is expected to recover in 2025, with growth anticipated in most major markets worldwide.
• Factors such as international visitation, group demand, and business travel are expected to drive revenue per available room (RevPAR) growth despite potential headwinds such as geopolitical issues and inflation.

The CBRE 2025 Global Hotel Outlook provides an in-depth analysis of the expected performance of the hospitality sector across various regions, including the U.S., Northern Latin America, Europe, the Middle East, and Asia-Pacific.

United States

The U.S. hotel market is expected to see a 2% increase in RevPAR (Revenue per Available Room) in 2025, driven by increases in inbound international visitation, modest rises in group demand, and a slight improvement in business travel. However, margins and profits may decline as expenses outpace total revenue growth.

Americas Hotel Performance & Key Macroeconomic Indicators as a Percentage of 2019

Note: All forward projections are based on historical data as of Dec. 31, 2024.
Source: CoStar, Kalibri Labs, CBRE Hotels Research, Oxford Economics, International Air Transport Association.

More recently, the announcement of a new round of U.S. tariffs—targeting key sectors such as steel, electronics, and certain consumer goods—has raised concerns about retaliatory actions from major trade partners. In particular, anti-U.S. sentiment has been rising in several countries across Asia and Latin America, which could lead to a short-term pullback in international travel to the U.S. from affected regions. Analysts warn that a sustained shift in traveler sentiment or government-imposed travel advisories could temper the expected boost in inbound visitation, particularly from China and parts of Southeast Asia.

Northern Latin America

Tourism in Northern Latin America is anticipated to continue its recovery. Mexico and Costa Rica experienced a 7% and 13% increase in tourist arrivals last year, respectively, while Colombia welcomed 6 million international tourists. These trends are expected to continue into 2025.

However, regional political leaders have voiced strong opposition to the recent U.S. trade policies, and if tensions escalate, there is a risk of softening U.S. outbound travel to the region. This could affect resort-heavy areas that rely heavily on American tourists, even as intraregional and European arrivals remain strong.

Europe

The European hotel and tourism sectors are expected to see mostly positive growth, driven by intra-European and other global demand. However, geopolitical issues—now compounded by shifting global sentiment tied to the new U.S. trade stance—may cause some travelers to limit their visits to countries seen as aligned with the U.S. or vulnerable to political spillover.

Middle East

The Middle East is expected to build on gains made in 2024 across the tourism, hospitality, aviation, and entertainment sectors. Year-over-year, tourism to Dubai and Abu Dhabi increased by 9% and 26%, respectively. The region remains relatively insulated from the recent U.S.-centered trade and sentiment shifts, although continued diplomatic alignment or friction with Western policies could shape long-term travel dynamics.

Asia-Pacific

Asia-Pacific markets continued to recover toward pre-pandemic levels, with total international arrivals last year at 92% of 2019 levels. In 2025, international arrivals are expected to exceed 2019 levels by 2.6%, with occupancy rates continuing to recover and average daily rates moderating.

Still, recent developments—including heightened tariffs and growing anti-U.S. sentiment in several parts of Asia—pose a risk to outbound tourism to the U.S. and to U.S.-branded hotel chains operating in Asia. While the broader recovery trend remains intact, operators may need to navigate changing traveler preferences and potential reputational challenges.

Investment Outlook

Despite an 11.5% decline in hotel investment volume in the U.S. last year, total global demand for hotel assets was up by 16%, and cross-border capital surged by 55%. With more than two years of dry powder on the sidelines and a predicted 75-bp reduction in the federal funds rate by year-end, investment volumes are expected to reaccelerate in the year’s second half.

That said, the introduction of new tariffs and potential for retaliatory trade actions may temporarily dampen investor confidence, especially among international buyers eyeing U.S.-based assets. Uncertainty around travel flows and economic responses could also delay capital deployment in affected regions.

Long-Term Drivers & Final Outlook

Major upcoming events—including the 2026 World Cup, the 2028 Olympics, and the country’s 250th anniversary in 2026—along with the enduring appeal of national parks, global gateway cities, and leisure destinations, are still expected to drive RevPAR growth of between 1.5% and 3.5% over the medium term, barring a major recession.

Despite challenges such as increased competition from alternative lodging sources, rising operational costs, and recent shifts in trade and travel sentiment, the overall outlook for the global hotel sector in 2025 remains cautiously optimistic. While political and economic developments may introduce new headwinds, hotel operators and investors are advised to stay agile and monitor changing dynamics closely to identify growth and expansion opportunities.