CoStar and Tourism Economics have further downgraded their U.S. hotel performance forecast for 2025, projecting a rare decrease in revenue per available room (RevPAR).
The revision now forecasts a 0.4% RevPAR decline for the year. According to CoStar, this will be the first year-over-year decline in U.S. RevPAR since 2020 (a special case due to the pandemic). A previous decline happened in 2009, during the Great Recession.
The latest 2025 forecast followed previous downgrades in June, when RevPAR growth projections were reduced from 1.8% to 1%, and August, when expectations dropped to a 0.1% decline.
For 2025, the revised forecast projects occupancy of 62.3%, down 0.2 percentage points from the prior forecast and down from 63% in 2024. Average daily rate (ADR) growth is expected to hold steady at 0.8% for this year.
Meanwhile, CoStar and Tourism Economics also downwardly adjusted their 2026 forecast, with U.S. RevPAR now expected to grow 0.5%, ADR to rise 0.9% and occupancy to be 62%.
"We expect little change in the macroeconomic environment as unemployment and prices continue to rise," said Amanda Hite, president of STR (CoStar's hospitality data subsidiary). "ADR is growing well below the rate of inflation, which in turn will put more pressure on margins."
Aran Ryan, director of industry studies with Tourism Economics, said job market softening, government policy uncertainty and tariff costs as near-term headwinds, though he expects the U.S. travel economy to "firm up moderately" next year.
"Household income growth will continue, accompanied by tax cut benefits, resumed hiring and less policy instability," forecasted Ryan, adding that "expanding global long-haul travel and World Cup interest" will help boost international visitation in 2026.