U.S. Hotel Industry Growth Forecast for 2024 and 2025 Revised Downwards by Str and Tourism Economics :: Hospitality Trends

• The final forecast revision for U.S. hotel growth in 2024 shows downgraded projections for average daily rate (ADR), revenue per available room (RevPAR), and occupancy.
• The outlook for 2025 also faced a downgrade, but growth is still expected, driven by factors like consumer spending, business investment, and international visitation.

The final revision of  STR and Tourism Economics’s U.S. hotel growth forecast for 2024 reflects a downgrade in growth rates. The firms revised down the projected gains in average daily rate (ADR) by -0.5 percentage points to +1.5% and revenue per available room (RevPAR) by -0.6 percentage points to +1.4%. Additionally, the occupancy rate for the year was adjusted by -0.1 percentage points to 62.9%.

The outlook for 2025 also saw a downgrade, with the occupancy growth projection lowered by 0.4 percentage points. Meanwhile, ADR and RevPAR growth forecasts were adjusted to +1.6% and +1.8%, respectively. Despite the downgrade, the sentiment for 2025 remains generally positive, albeit marred by concerns over the rising cost of living.

Amanda Hite, STR President, noted that higher-end hotels are expected to continue leading industry performance, driven by current economic conditions. She also highlighted the potential for stronger economic conditions following a change in the presidential administration, although this is not yet reflected in the data.

The economic drivers support growth in travel activity in 2025. Aran Ryan, Director of Industry Studies at Tourism Economics, highlighted that consumer spending and business investment are expected to expand, supporting further gains in business and group travel demand. Additionally, growth in international visitation presents a potential boost for the industry.

Ryan, however, cautioned that these forecasts were prepared pre-election and assumed economic conditions consistent with the political status quo. He noted that potential policy changes from the Trump administration, such as looser fiscal policy, could provide temporary economic boosts before being offset by factors such as tariffs and immigration, which could moderate growth.

Hite also commented on the annual gross operating profit (GOP) and earnings before interest, taxes, depreciation, and amortization (EBITDA) margins, noting that they remained unchanged from the previous forecast, with slight improvements expected year over year. For 2025, she projected higher growth across both metrics, driven by lower labor costs and an inflation-adjusted GOP forecasted to approach 2019 levels.