Occupancy and room rates both increased in Q3, while rising operating costs continue to weigh on hotel owners’ margins
NEW YORK – Cushman & Wakefield (NYSE: CWK), a leading global commercial real estate services firm, released its Q3 2026 U.S. Hospitality MarketBeat report, finding that hotel performance gained momentum during the third quarter as demand growth significantly outpaced supply growth, driving the strongest quarterly revenue-per-available-room (RevPAR) increase since early 2023.
Nationally, RevPAR increased 7.1% year-over-year (YOY) in Q3 2026, supported by a 2.7% rise in occupancy to 67.7% and a 4.3% increase in average daily rate (ADR) to $169 per room. Demand expanded 3.1% YOY during the quarter, compared with just 0.4% YOY supply growth. The improvement marked a shift from the first half of the year, when performance gains were driven primarily by room-rate growth. Midweek business travel was a notable contributor, with midweek RevPAR climbing approximately 9% during Q3. Year-to-date (YTD) RevPAR growth reached 5.6%.
"Hotel fundamentals strengthened meaningfully during the quarter as demand growth broadened beyond pricing power alone," said Maggie Tillotson, Senior Research Analyst at Cushman & Wakefield. "For much of the last two years, operators relied on ADR growth to support performance. What stood out this quarter was the return of occupancy growth at a time when new supply remains limited. That's an encouraging sign because it points to healthier demand fundamentals rather than simply higher room rates."
Large urban markets led performance during the quarter. Washington, D.C. recorded 17.8% RevPAR growth, followed by Philadelphia at 17.5% and Chicago at 15.6%. Washington, D.C. and Philadelphia benefited from America 250 celebrations, which helped drive July RevPAR growth of 20.7% and 26.0%, respectively. However, growth in both markets is expected to moderate in Q4 as event-driven demand fades. Meanwhile, Las Vegas was the only top 25 U.S. market to post a decline, with RevPAR falling 4.6% YOY as occupancy dropped 5.9%.
By hotel segment, luxury properties again outperformed all chain scales, generating 11.9% RevPAR growth during the quarter, including 13.0% growth in September. The economy segment also showed renewed momentum, posting 4.5% RevPAR growth, its strongest quarterly increase since Q2 2022.
Lodging and resort REITs generated a 37.6% return YTD through September, outperforming all property sectors and significantly exceeding the 7.9% return for all equity REITs. They were also the only property sector to generate a positive return in September, at 0.7%, despite rising Treasury yields.
Despite improving revenue metrics, operating costs remain a challenge. According to the report, nearly half of surveyed hotel owners identified rising expenses as a key factor limiting profitability, even as occupancy and room revenues improve.
Click here to download the Q3 2026 U.S. Hospitality MarketBeat.
