SHERIDAN, WYOMING – Feb. 10, 2025-The U.S. hotel industry is set for a modest growth in 2025, with a projected 1.8% increase in RevPAR. The Average Daily Rate (ADR) is also expected to rise by 1.6%, while the occupancy rate is anticipated to remain at 63.1%.
Key Trends:
- Shifting Demand: The growth momentum is shifting from the second half of the year to the first half, driven by demand from disaster-stricken markets in 2024.
- Luxury Segment: The luxury RevPAR is projected to grow by 2.9% in 2025, fueled by strong demand in 2024.
- Steady Performance: The upper-upscale, upscale, and upper-midscale segments are expected to maintain their solid performance.
- Midscale Segment Challenges: The midscale segment may face a 0.7% decline in RevPAR due to supply growth and difficult comparisons in the latter half of the year.
- Rising Acquisition Costs: Hoteliers are facing increased customer acquisition costs, averaging around 18%.
- Online Booking Dominance: The hotel booking process has shifted significantly towards online channels, with brand.com bookings holding 25% of share and property direct bookings declining to 30%.
- Slight Profit Growth: Despite challenges, the forecast suggests a slight increase in general operating profit per available room in 2025. However, after adjusting for inflation, the U.S. hotel industry is expected to end the year 1% below real GOP compared to 2019.
- Demand Segments:
- Corporate transient demand may face headwinds due to stock market and corporate profits, but rising return-to-office rates could boost business travel.
- Foreign inbound leisure is expected to be positive, driven by exchange rates and travel expenses.
- The domestic leisure outlook is also positive due to soft comps from 2024.
Overall:
The hotel industry is poised for steady growth in 2025, despite rising expenses and the shift towards online booking channels. The growth will be driven by various factors, including increased demand in the first half of the year, strong performance in the luxury segment, and positive outlooks for both corporate and leisure travel. However, hoteliers will need to navigate challenges such as rising acquisition costs and declining direct bookings.