New travel policies put U.S. hotel demand at risk

Hotels near U.S. borders see declining demand as new travel policies and international advisories create uncertainty for visitors

U.S. hotel occupancy, after a modest February increase, declined in early March, with border regions particularly affected. This downturn is linked to new travel advisories and potential policy changes, raising concerns about a long-term "chilling effect" on international tourism and hotel demand.

Key takeaways

• Early March decline: Occupancy dropped 1.4% and 3.5% in the first two weeks of March compared to 2024.
• Border regions hit hardest: Hotels near the Canadian and Mexican borders saw demand declines of up to 4.8%, likely tied to travel policy uncertainty.
• Travel uncertainty as deterrent: Fear of stricter U.S. entry processes may shift travelers to easier destinations like Canada or the Caribbean.
• Not uniform across U.S.: While major cities show fluctuations, border markets appear directly vulnerable to policy shifts.
• Limited direct impact, but risks remain: Inbound tourism makes up a small portion of total U.S. travel, but long-term policy changes, labor shortages, and a strong dollar could pressure hotel revenues and margins.

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