SHERIDAN, WYOMING – Feb. 23, 2025 – CBRE Forecast Shows RevPAR to Increase in 2025, indicating a sustained recovery and growth within the U.S. lodging industry. According to CBRE's latest projections, revenue per available room (RevPAR) is expected to rise by 2.0 percent in 2025, driven by improved occupancy and average daily rate (ADR) increases.
Projected Growth and Market Dynamics
CBRE forecasts a 2.0 percent increase in RevPAR growth for 2025, with occupancy improving by 23 basis points and ADR increasing by 1.6 percent. This projected growth indicates the continued recovery of the lodging industry, with RevPAR expected to be 16.6 percent higher in 2025 compared with pre-pandemic levels in 2019.
The forecast is underpinned by a projected 2.4 percent GDP growth rate and average inflation of 2.5 percent for 2025. Given the typically strong correlation between GDP and RevPAR growth, the strength of the economy is a crucial factor in the lodging industry’s performance.
Urban Markets Leading the Charge
“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 percent this year,” said Rachael Rothman, head of hotel research and data analytics, CBRE. “The sector’s resilience and the sustained demand for higher-priced hotels bode well for the upcoming year.”
Urban locations are expected to outperform due to improvements in group and business travel, as well as the continued recovery of inbound international travel. This trend highlights the ongoing demand for premium hotel experiences in key metropolitan areas.
Anticipated Events and Future Outlook
With numerous major events on the horizon, including the 2026 FIFA World Cup, the 2028 Summer Olympics in Los Angeles, and the United States’ 250th anniversary in 2026, CBRE projects sustained RevPAR growth within the 1.5 percent to 3.5 percent range over the next several years, barring a recession. The enduring appeal of national parks, global gateway cities, and U.S. leisure destinations further bolsters this positive outlook.
Investment and Supply Considerations
“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,” 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.”
CBRE anticipates restrained supply growth due to high financing and construction costs, averaging less than 1 percent over the next three years. Potential additional tariffs, labor shortages, or the Fed pulling back on further interest rate reductions could further temper supply growth, enhancing pricing leverage and increasing replacement costs for existing assets.
Conclusion
The CBRE forecast paints a promising picture for the U.S. hotel market in 2025. Driven by strong urban performance, major upcoming events, and a resilient economy, the industry is poised for continued growth. While cost pressures and supply constraints remain factors to consider, the overall outlook is optimistic, with increased investment activity expected to follow.
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