October Brings Slight Relief to U.S. Hotels Despite Ongoing Challenges

Isaac Collazo, Senior Director of Analytics at STR, Highlights U.S. Hotel Industry Trends for October 2025

The U.S. hotel industry experienced a 0.9% decline in revenue per available room (RevPAR) in October, marking the fifth consecutive month of declines. However, this decrease was the smallest during this period, suggesting some positive signs. The decline was primarily driven by a 1.6 percentage-point drop in occupancy, the steepest in eight months. Despite these challenges, the average daily rate (ADR) increased by 1.5%, the highest in six months, though it remains below the inflation rate.

Impact of Government Shutdown and Hurricanes

The U.S. government shutdown, which lasted from October 1 to November 12, was initially considered a significant factor in the hotel industry’s performance. However, analysis indicates that it was not the primary cause of the decline in demand. During the shutdown, hotel room demand fell by 2.2 million room nights year over year. In the 43 days before the shutdown, demand was already down by 1.5 million room nights. The decline was exacerbated by hurricane impacts in 13 markets, which reduced hotel demand by over 1 million room nights, accounting for 57% of the total U.S. room demand decline for the month. Excluding these hurricane-affected markets, room demand was down but consistent with trends since April.

Regional Variations in Performance

Washington, D.C., was notably affected by the government shutdown, with RevPAR dropping 8.8% amid declining occupancy. However, this impact was limited, as the city’s hotel room demand had already been declining in previous months. The most significant decrease was observed in upper-upscale hotels, where demand fell by 9.8%. The central business district accounted for a significant portion of this decrease. Despite these challenges, the top 25 U.S. hotel markets, excluding hurricane-affected areas, saw a 0.5% increase in RevPAR in October. Markets such as San Francisco and Anaheim experienced notable RevPAR gains driven by strong convention calendars.

Group Demand and Luxury Segment Performance

Group demand in luxury and upper-upscale hotels remained flat, with a slight 0.4% decrease, despite a 0.8% increase in total room demand. October’s group demand was the tenth highest ever recorded by STR. Luxury-class hotels led the industry with a 3.7% increase in RevPAR, driven by a 3.9% rise in ADR. Year-to-date, U.S. hotel RevPAR is down 0.1%, with occupancy falling and ADR up by 1%. Excluding Las Vegas, RevPAR is up 0.5%, with hurricane markets contributing significantly to this growth.

Hotel Development Pipeline

The U.S. hotel development pipeline saw a slight 0.9% increase in October, with more rooms in the planning stages. However, construction activity decreased by 11.8% compared to the previous year. Despite this decline, 1,201 hotels are under construction in the U.S., with a significant portion in the upper midscale and upscale segments. Globally, the U.S. leads with 730,000 hotel rooms in the pipeline, followed by China with 474,000.

Global RevPAR Trends

Globally, hotel RevPAR increased by 5.2%, driven by a 4.9% rise in ADR. Excluding the U.S., RevPAR rose by 7.9%, with significant gains in Germany, the Gulf Cooperative Council, India, and Japan. Canada also saw strong RevPAR growth, with 14 out of 22 markets experiencing increases of 8% or more. In contrast, Mexico experienced a slowdown, with major markets seeing an 8.2% decline in RevPAR due to falling occupancy and ADR.

Outlook

The U.S. hotel industry’s forecasts for 2025 and 2026 have been adjusted downward, with little change expected in the next 14 months. RevPAR is projected to decrease in the fourth quarter of 2025 and the first quarter of 2026, with growth anticipated for the remainder of 2026. Occupancy and ADR will remain under pressure, but as recent policy changes stabilize, these metrics may improve. Globally, most markets are expected to continue on a positive trajectory, though some areas are showing weakness.

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