-
U.S. Hotels Face Ongoing Challenges with International and Group Travel Recovery – Image Credit Unsplash+
Dan Kubacki of CoStar reports that the U.S. hotel industry continues to face challenges in recovering demand, particularly from international visitors and group travel segments. Despite some improvements, these areas have not returned to pre-pandemic levels, and recovery remains uncertain.
International Travel Preferences
Before the COVID-19 pandemic, the U.S. experienced a robust influx of international visitors, surpassing the number of Americans traveling abroad. However, the current landscape reveals a different picture. While there is an upward trend in U.S. outbound travel, the inbound international demand has not rebounded to 2019 levels and is even trailing behind projections for 2024.
According to Raleigh Gresham, managing director at The MODIV Group, political factors are not the primary deterrent for international travelers. Instead, travelers are opting for more unique destinations and experiences outside the U.S. This shift in preferences indicates that travelers prioritize diverse experiences over traditional destinations.
Interestingly, U.S. outbound travel has shown signs of slowing, possibly due to Americans reassessing their travel budgets amid rising everyday costs. Chris Klauda, Director of Analytics at STR, noted that outbound travel was flat in June, suggesting that economic factors may be influencing travel decisions.
Slowing Group Demand and Intentional Business Travel
Group travel demand in the U.S. hotel industry has also faced a sluggish recovery. After a significant decline in 2020 and 2021, there was a rebound from 2022 through 2024. However, the demand has not reached the heights of 2019, and recent trends suggest a plateau in 2025.
Klauda highlighted that group demand was flat year over year in 2025, with only the early months showing strong increases. Seasonal shifts, such as Easter and Passover, may have contributed to fluctuations, but the overall trend remains concerning. The federal government’s reduced travel spending and industries opting for smaller or regional events are contributing factors.
MODIV Group’s consumer surveys reveal that travel costs are not the primary concern for professionals when selecting conferences or business trips. Instead, the purpose and exclusivity of trips are becoming more significant. There is a noticeable shift towards smaller, intentional gatherings, particularly in the corporate space. Approximately 60% of respondents indicated that regional or hybrid formats have replaced at least one large-scale event.
Discover more at CoStar.
