Globally, RevPAR outside the U.S. increased by 4.2%, driven by ADR growth (+2.4%) and a 1.3 percentage point rise in occupancy.
The U.S. hotel industry continues to face challenges as revenue per available room (RevPAR) remains lackluster, driven by stalled business travel and declining demand in economy hotels.
U.S. RevPAR Trends
For the week ending 16 August 2025, U.S. hotel RevPAR fell by 0.5%, influenced significantly by difficult year-over-year comparisons in Houston. Houston alone accounted for 5 basis points of the national RevPAR decrease, with 47% of all markets experiencing a decline of more than half a percentage point. This marks the highest percentage of markets with declines in the past four weeks. Nationwide, falling occupancy rates were the primary driver of the RevPAR decline, while the average daily rate (ADR) saw a modest increase of 0.4%.
Impact of Business Travel Slowdown
The slowdown in weekday occupancy, particularly in the Top 25 Markets (T25), had a significant impact on the week’s performance. Business travel, which is best represented by weekday performance, has plateaued. Although leisure travel continued, as evidenced by strong weekend performance, it was insufficient to sustain the industry. Weekday occupancy declined by 0.7 percentage points, with ADR up only 0.3%, resulting in a 0.9% reduction in RevPAR. In contrast, weekend RevPAR increased by 0.3%, driven by a 0.6% rise in ADR, despite a 0.2 percentage point dip in occupancy.
Regional Performance Variations
Notable differences emerged between the Top 25 Markets and other regions. In the T25 Markets, weekday RevPAR fell by 2.3%, and weekend RevPAR decreased by 1.3%, with occupancy being the primary factor. Overall, T25 weekly RevPAR dropped by 2%. Excluding Houston, weekly RevPAR was down 0.9% overall, with negative weekday comparisons (-1.3%) and a flat weekend. In contrast, non-T25 metro areas saw slight improvements, with weekday and weekend RevPAR up by 0.2% and 0.3%, respectively. Non-metro/rural areas posted the largest weekly gain (+0.7%), with the weekend advancing by 1.9% and weekdays remaining flat.
Challenges for Economy Hotels
As the summer travel season nears its end, the U.S. hotel industry is experiencing its weakest summer in four years. Demand is down by 1.4 million room nights compared to the same period last year. RevPAR has declined by 1.1% due to lower occupancy, with ADR up just 0.2%. The demand retreat is primarily affecting economy hotels, with 45% of the decline centered in 10 markets, including Houston, Las Vegas, and Los Angeles. Houston and Las Vegas account for nearly a quarter of the economy hotel decrease. While midscale and upper upscale class hotels have also seen declines, luxury, upscale, and upper midscale hotels have gained room nights, albeit insufficient to offset the losses from other classes.
Performance in the Top 25 Markets
The Top 25 Market performance has been under pressure for much of the summer. Of the 16 markets experiencing RevPAR declines, all but Tampa have seen decreases over the past four weeks. Excluding Houston and Las Vegas, the remaining Top 25 Markets have struggled due to declining occupancy and minimal ADR growth. Houston’s weekly RevPAR dropped by 27.1% due to challenging 2024 storm-elevated comparisons, although positive group demand provided a bright spot. New Orleans and Las Vegas also faced difficult comparisons, with RevPAR declines of 14.5% and 5.2%, respectively, over the past four weeks.
Global Context and Canada’s Performance
Globally, RevPAR outside the U.S. increased by 4.2%, driven by ADR growth (+2.4%) and a 1.3 percentage point rise in occupancy. Japan and Canada led the top-performing countries, with Canada reporting solid performance throughout the summer. Canadian RevPAR has increased by 8.3% in the most recent period, marking 10 consecutive weeks of growth. In contrast, the U.K. experienced a RevPAR slowdown (-2.2%) due to challenging comparisons with last year’s events, while Germany and France faced declines due to sports-related events from the previous year.
Outlook
Looking ahead, the next couple of weeks through Labor Day are expected to see continued challenges. With schools in session across much of the country, leisure travel is likely to slow, and business travel is not expected to fill the gap. The impact of Hurricane Erin and other difficult comparisons from previous storms will also influence upcoming results.
