SHERIDAN, WYOMING – Feb. 21, 2025 – CBRE has released its projections for the U.S. hotel market in 2025, forecasting continued steady growth driven by strong performance in urban locations. The company anticipates a 2% increase in Revenue Per Available Room (RevPAR) growth, fueled by a 23 basis point (bps) improvement in occupancy and a 1.6% rise in Average Daily Rate (ADR). This growth trajectory suggests a sustained recovery for the lodging industry, with projected 2025 RevPAR 16.6% higher than pre-pandemic levels in 2019.
Urban Locations Lead the Charge
CBRE's forecast highlights the continued outperformance of urban markets, driven by rebounding group and business travel, as well as the ongoing resurgence of inbound international tourism. “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,” said Rachael Rothman, CBRE’s head of hotel research & data analytics. “The sector’s resilience and the sustained demand for higher-priced hotels bode well for the upcoming year.”
Economic Factors and Future Projections
CBRE’s baseline forecast incorporates a 2.4% GDP growth rate and average inflation of 2.5% for 2025. The company emphasizes the strong correlation between GDP and RevPAR growth, noting that the overall health of the economy will significantly influence the lodging industry's performance. Looking ahead, CBRE projects RevPAR growth within the 1.5% to 3.5% range over the next several years, assuming no recession, driven by major events such as the 2026 FIFA World Cup, the 2028 Summer Olympics in Los Angeles, and the U.S.’ 250th anniversary in 2026, as well as the enduring popularity of national parks, global gateway cities, and U.S. leisure destinations.
Investment Outlook and Supply Constraints
Beyond RevPAR growth, CBRE anticipates a resurgence in investment activity in the latter half of 2025. “Despite existing cost pressures, the U.S. hotel market fundamentals remain robust, and we anticipate a resurgence in investment activity in the latter half of 2025,” said Bill Grice, president, CBRE Hotels in the Americas. “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.”
Furthermore, CBRE forecasts restrained supply growth due to elevated financing and construction costs, averaging less than 1% over the next three years. The company notes that potential additional tariffs, labor shortages, or a change in the Federal Reserve's interest rate policy could further limit supply growth, thereby enhancing pricing leverage and increasing replacement costs for existing assets. This controlled supply environment, coupled with robust demand, is expected to further support the positive outlook for the U.S. hotel market.
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