For the data behind the commentary, download the full Q2 2025 U.S. Hospitality Report.
Q2 2025 Hospitality Key Trends
- RevPAR Trends Are Mixed: June 2025’s U.S. RevPAR declined by 1.2% year-over-year (YOY), the steepest yearly drop since March 2024. Despite this setback, year-to-date RevPAR through June remained slightly positive, up 0.8%. The luxury segment continues to outperform in RevPAR, reporting a 3.3% increase.
- Occupancy Stabilizes while Group Demand Falls: Occupancy rates have stabilized but remain below pre-pandemic levels. Group demand, a key driver of weekday performance in the hotel industry, fell by 3.0% in Q2 2025, reversing the 3.7% growth recorded in Q1 2025. This shift reflects a softening in corporate travel amidst economic uncertainty.
- Development Pipeline at a 27-Quarter Low: The number of hotel rooms under construction is at its lowest point in 27 quarters, reflecting cautious development activity because of factors like tighter financing conditions and rising costs.
- International Travel Wanes in the First Half of 2025: The U.S. welcomed approximately 15.9 million overseas visitors (excluding Canada and Mexico) in the first half of 2025, representing a 1.2% YOY decline. Contributing factors include ongoing geopolitical tensions, global economic headwinds such as inflation and elevated travel costs, challenges related to visa processing, and a weakening international perception of the U.S.
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Consumer Sentiment: While consumer sentiment shows signs of stabilization heading into the second half of 2025, lingering concerns about labor market conditions and evolving trade policies continue to weigh on overall confidence.
- Tariffs Impact Investment: Hotel owners and investors face mounting pressure from tariffs, macroeconomic uncertainty, and rapid technological change. Tariffs on imported construction materials, furnishings, equipment, and food and beverage are inflating development, renovation, and operating costs, complicating investment decisions and project timelines.
For the data behind the commentary, download the full Q2 2025 U.S. Hospitality Report.
