In the U.S., CBRE has reduced its 2025 RevPAR growth forecast to 0.1 percent from 1.8 percent previously. Hotel fundamentals are expected to undergo more dramatic changes over the next three quarters due to a less active hurricane season and fewer election-related events than last year, as well as tariff increases and continued competition from lodging alternatives.
United States
Despite stronger-than-expected economic growth through the first half of 2025, year-to-date RevPAR growth through July stands at a meager 0.4 percent as the occupancy rate fell for four consecutive months.
Historically, ADRs tend to contract following four to six months of occupancy declines, which does not bode well for the balance of the year. CBRE now forecasts RevPAR growth of -0.6 percent for H2 2025, bringing our full-year 2025 RevPAR forecast to just 0.1 percent year-over-year, down from our earlier forecast of 1.8 percent.
CBRE lowered its 2025 U.S. GDP growth forecast to 1.5 percent from 1.9 percent earlier in the year, reflecting the impact of persistent trade tensions, elevated interest rates and geopolitical uncertainty. CBRE also lowered its 2026 GDP growth forecast to 1.8 percent from 2.5 percent, well below the long-term average. Inflation is expected to remain elevated, with CPI growth forecast at 2.9 percent for the year—10 basis points higher than previous estimates. Along with weaker growth in real disposable income and cautious consumer sentiment, these are expected to weigh on hotel fundamentals for the rest of this year and in 2026.
Following better-than-expected RevPAR gains in Q4 2024 and Q1 2025, growth fell sharply in Q2. This can be attributed to several factors: a modest 0.5 percent increase in inbound foreign travelers, a drop in meeting and convention attendance, less business travel, government layoffs and a 5.3 percent increase in the supply of short-term rentals over the past 12 months.
Hotel market fundamentals are expected to remain challenged for at least the next three quarters. Year-over-year changes will be more dramatic due to strong demand last year from an active hurricane season and presidential election-related events, as well as flat per diems for travel by government workers, increased tariffs and continued competition from lodging alternatives. These headwinds are compounded by persistent labor challenges and rising operating costs, which are pressuring margins. As alternative lodging options proliferate, hotel margins are expected to decline for the third consecutive year in 2025.
Chain-affiliated hotels have outperformed independents in 2025, supported by a 12 percent CAGR in loyalty program membership since 2019. Loyalty programs continue to provide a buffer for occupancy during challenging periods, though their impact is partially offset by the 40 percent cumulative proliferation of brands among the world’s largest hotel families since 2019. Luxury remains the strongest-performing chain scale, while urban hotels lead in year-over-year growth. However, urban hotels still trail their pre-COVID performance levels.
Lower-priced hotels are expected to underperform through the remainder of 2025 and into early 2026, having benefited disproportionately from hurricane-related demand in late 2024 and early 2025.
Additionally, tariffs, inflation risks and the potential for rising unemployment could suppress demand by price-sensitive travelers.
CBRE expects San Francisco, Orlando and San Jose, Calif., to see the strongest RevPAR growth and Memphis, Austin and New Orleans to see the weakest over the balance of 2025 and in 2026. San Francisco and San Jose will benefit from a strong convention calendar and large special events like the Super Bowl and World Cup in 2026. Orlando will benefit from the opening of a new theme park in 2025.
CBRE expects further improvement in hotel fundamentals next year, supported by special events such as the World Cup and the country’s 250th birthday. Even so, top-line growth is expected to remain below inflation for the foreseeable future. With construction and operating costs at all-time highs on a per-available-room basis, CBRE forecasts annual supply growth of just 0.7 percent between 2024 and 2028, less than half the rate over the four years preceding COVID. Persistent growth in shadow supply will likely delay the hotel market’s next upcycle beyond the near term.
Now in its fifth year, the hotel sector’s recovery has entered its later stages. Operators and asset managers must remain diligent on cost control, while continuing to deliver clean, safe and comfortable guest experiences. Maintaining amenities and service levels is critical to retaining market share, especially as competition from shadow supply and limited-service brand offerings intensifies.
Hotel owners and operators should optimize channel mix, invest in guest-facing services and amenities, retrofit obsolete spaces into revenue-generating outlets where possible and work hard to keep review scores high.
Canada
Heading into 2025, the Canadian hotel market was expected to return to a typical RevPAR growth pattern, characterized by supply and demand balance and moderate ADR growth.
Following several years of strong demand growth and minimal new supply, the national occupancy rate was expected to remain at peak levels (~65 percent).
New hotel supply was expected to rebound to levels in line with historical norms (~1.5 percent) after several years of increased construction and borrowing costs, along with closures and conversions of existing properties.
The Canadian hotel market saw significant ADR growth in recent years, including a 4.5 percent increase in 2024 to more than $200. Strong demand was driven by both leisure and business travel, as well as improved technology that helped operators drive rate yield.
Northern Latin America
Northern Latin America tourism is undergoing a dynamic upswing this year, with Mexico, Costa Rica, Colombia and the Dominican Republic all showing strong performance.
Mexico led the region with over 15.6 million international tourists between January and April, while the Dominican Republic welcomed more than 4 million visitors in the first four months. Colombia recorded a 6.6 percent year-over-year increase in international arrivals and Costa Rica, despite a 2.8 percent dip in early-year arrivals, remains a top destination for eco-tourism.
Hotel development is booming across the region: Mexico added over 2,280 new rooms by May, with Cancun accounting for 75 percent of that total. The Dominican Republic is undergoing a major expansion with 78 hotel projects adding more than 18,000 rooms, while Costa Rica is preparing 26 new projects to deliver 1,500 rooms by 2026, backed by over $700 million in investment.
The outlook for the rest of 2025 is promising. Mexico expects 3,900 more hotel rooms and a rebound in air travel. Colombia’s tourism sector is set to contribute over $21 billion to its economy and create 1.3 million jobs. The Dominican Republic aims to reach 12 million visitors, with tourism contributing 15.8 percent to GDP, while Costa Rica forecasts a 1.7 percent increase in air arrivals totaling over 2.6 million travelers. Together, these countries are driving Northern Latin America’s rise as a global tourism powerhouse.
Tourism across Mexico, Costa Rica, Colombia and the Dominican Republic has shown resilience so far this year amid global uncertainties. Mexico reported a hotel occupancy rate of 58.7 percent across 70 destinations, slightly below previous years, yet saw a notable increase in international tourists to 15.6 million. Los Cabos and the Riviera Maya stood out for their strong performance. Costa Rica, while facing a slight slowdown in tourism due to limited air travel and global trends, maintained a stable hotel market with a 64.8 percent occupancy rate and continued to expand its luxury offerings.
Economic stability and strategic investments have supported tourism infrastructure and air connectivity across the region. Colombia recorded a 6.6 percent increase in international visitors during the first five months of 2025, with Bogota, Cartagena and Medellin standing out for their strong arrival numbers and hotel occupancy rates. The Dominican Republic, while experiencing a reduction in flights from North America, expanded its air routes to Europe and is on track to receive over 12 million visitors by the end of the year, contributing significantly to its tourism revenue. Costa Rica also maintained its appeal among high-end travelers, with a 6.5 percent rise in hotel room capacity in 2024.
Shifting travel patterns are reshaping regional tourism flows. Mexico has seen increased arrivals from Argentina and Canada, while visitor numbers from the U.S., Colombia and the U.K. declined. Colombia’s tourism sector benefited from enhanced international promotion and connectivity. Meanwhile, the Dominican Republic anticipates long-term growth in tourism, with projections suggesting continued expansion and a strong contribution to the national economy. Together, these countries reflect a dynamic and evolving tourism landscape in Latin America.