CBRE forecasts that revenue per available room (RevPAR) will continue to grow steadily in 2025, as urban locations continue to outperform due to improved group and business travel and continued recovery of inbound international travel.
CBRE forecasts a 2.0% increase in RevPAR growth in 2025, with occupancy improving by 23 basis-point (bps) and average daily rate (ADR) increasing by 1.6%. This projected growth indicates the continued recovery of the lodging industry, with RevPAR expected to be 16.6% higher in 2025 compared with pre-pandemic levels in 2019.
CBRE’s baseline forecast includes a 2.4% GDP growth rate and average inflation of 2.5% for 2025. Given the typically strong correlation between GDP and RevPAR growth, the relative strength of the economy will directly impact the lodging industry’s performance.
The U.S. hotel market is poised for steady growth in 2025, primarily led by continued outperformance of the urban segment, which should experience RevPAR growth of 2.8% this year. The sector’s resilience and the sustained demand for higher-priced hotels bode well for the upcoming year. Rachael Rothman, CBRE’s Head of Hotel Research & Data Analytics
With numerous events planned for the next few years including the 2026 FIFA World Cup held in the U.S., Mexico and Canada; the 2028 Summer Olympics in Los Angeles; and the United States’ 250th anniversary in 2026, along with the ongoing appeal of national parks, global gateway cities, and U.S. leisure destinations, CBRE projects RevPAR growth within the 1.5% to 3.5% range over the next several years, barring a recession.
Despite existing cost pressures the U.S. hotel market fundamentals remaining robust, we anticipate a resurgence in investment activity in the latter half of 2025. With ample dry powder available and the potential for a lower Fed funds rate before year-end, we expect to see a narrowing of buyer and seller expectations, fueling increased transaction activity. Bill Grice, President of CBRE Hotels in the Americas
CBRE expects restrained supply growth due to high financing and construction costs, averaging less than 1% over the next three years. Potential additional tariffs, labor shortages or the Fed pulling back on further interest rate reductions could temper supply growth even more, enhancing pricing leverage and elevating replacement costs for existing assets.
The February 2025 edition of Hotel Horizons for the U.S. lodging industry, 65 major markets, the six hotel chain scales and six location types can be purchased by visiting: https://pip.cbrehotels.com/hotelhorizons. CBRE’s baseline forecasts do not contemplate an international war or a pervasive recession. CBRE also produces forecasts based on upside and downside scenarios.
