RevPAR Growth and Economic Context
The U.S. hotel sector has outperformed initial 2026 projections, prompting CoStar and Tourism Economics to raise their revenue per available room (RevPAR) growth forecast to 2.8%. Year-to-date data through April shows RevPAR growth at 4.0%, with the first quarter achieving record highs. This performance comes amid a complex environment shaped by persistent macroeconomic uncertainty, ongoing conflict with Iran, and both global and domestic pressures on the U.S. administration.
Despite these challenges, the industry has avoided the headwinds that affected performance in 2025. Key drivers include robust leisure travel, a recovery in business travel, and a strengthening events calendar. Notably, demand has been solid on shoulder days, such as Sundays and Thursdays, indicating a broader recovery in travel patterns.
Segmentation Trends
Since the start of 2026, overall U.S. hotel demand has increased by 2.0% compared to the previous year. Transient demand, which refers to bookings of fewer than 10 room nights, began to recover in late 2025. However, the most significant improvement has occurred in the group segment—bookings of 10 or more room nights—which grew by 2.7% between February and April. This growth was particularly strong in secondary markets that typically host small- to medium-sized events.
Chain Scale Performance
Growth in demand has been seen across all hotel chain scales, but increases in average daily rate (ADR) are concentrated in the luxury segment. Luxury ADR was just below 6% for the year through April, reflecting less pricing pressure among higher-spend travelers. Select-service properties, with ADR growth of around 2%, remain below the inflation rate, though this marks an improvement over the performance pressures experienced in 2025. Lower-end properties have seen some demand gains, but rate growth remains weak due to pricing sensitivity among their customer base.
Event Impact and Summer Outlook
Projections for summer 2026 are positive, bolstered by the upcoming FIFA World Cup, ongoing demand, and a recovery in mid-sized events. While large event performance remains uncertain due to factors such as “Blue Dot Fever” affecting the live music industry, major tours like BTS’s ARIRANG World Tour are expected to drive demand. America 250 events are also anticipated to benefit the industry, though their impact will depend on the host locations.
Development Pipeline and Supply
Expectations for new hotel supply in 2026 have been reduced, with projected growth lowered from 0.7% to 0.4%. The pipeline contains nearly 767,000 rooms, but only 19% are currently under construction—the lowest proportion in 12 years. This slowdown is attributed to economic uncertainty, inflationary pressures, increased business costs, and the possibility of higher central bank interest rates later in the year.
International Travel and Outbound Trends
International inbound travel to the U.S. is expected to rise by 3.4% in 2026, a slight downgrade from earlier forecasts. Growth has been led by Europe and Latin America, while arrivals from Canada and Asia Pacific remain weak. The World Cup is projected to contribute 1.1% to inbound growth. Outbound travel by U.S. residents is now forecast to grow by 3.8%, down from 4.6%, with more travelers opting to stay within the U.S. This trend is supporting domestic demand, particularly in resort markets.
Conclusion
In summary, the U.S. hotel industry’s 2026 outlook is more optimistic than earlier in the year, with strong demand, event-driven boosts, and a resilient recovery across most segments. However, ongoing economic and geopolitical uncertainties continue to influence both supply and expectations for international travel.
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