CoStar optimistic on hotel profitability in 2025

While the overall numbers didn’t shift, there are some differences with how the forecast now views 2025

Last week at the Americas Lodging Investment Summit (ALIS) in Los Angeles, CoStar and Tourism Economics made slight adjustments to their original 2025 U.S. hotel forecast.

Key takeaways

• The projected growth rates for average daily rate (ADR) (+1.6%) and revenue per available room (RevPAR) (+1.8%) remain consistent with the final 2024 forecast. However, the 2025 occupancy rate receives a slight boost, rising 0.1 percentage points to 63.1%;
• Industry growth in 2025 is expected to be driven primarily by ADR increases rather than occupancy improvements;
• The upper upscale segment continues to lead as the top performing category, with its projected growth revised slightly upward. Conversely, the midscale segment has been revised downward;
• Among all segments, midscale is the only one projected to experience negative RevPAR in 2025, primarily due to the impact of increased supply.

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