NEW YORK CITY — A first half of positive hotel performance numbers has given owners, operators and forecasters a sunnier outlook for the rest of the year.
That culminated on Monday with CoStar and Tourism Economics increasing their forecast for 2026 at the opening session of the International Hospitality Investment Forum in New York.
By how much? Let’s have Jan Freitag, CoStar's national director of hospitality analytics, give us the technical term.
“A lot.”
The revised 2026 forecast rose from January's 0.6 percent revenue per available room gain to a whopping 2.8 percent today. That number was driven by a dramatic projected increase in demand (moving from 0.4 percent forecast in January to 1.3 percent), as well as gains in occupancy (from 62.1 percent to 62.8 percent) and, especially, average daily rate (from a 1 percent increase to 2 percent).
But with inflation projected to exceed that number, Freitag said the pressure on owners and operators will continue to be about managing expenses in the middle.
“This is going to continue the conversation that we've had for the last year … about margin pressure. How do we make margins stick?” he said.
CoStar and Tourism Economics also lowered their expectations for supply growth in 2026, from a projected 0.7 percent in January to 0.4 percent now. But Freitag said don’t read too much into that decline, except for the continuing trend that it’s hard to build much of anything right now.
“A lot of you are trying to figure out how much it costs to build, and what the interest rates look like. We're not going to make a forecast about the interest rate environment, but you're clearly seeing here that the number of rooms in construction continues to decelerate,” he said.
Freitag said it’s not a surprise that the number of rooms under construction has continued to trend down, unless you are in a fast-growing market.
“We don't expect that to change unless you are in Nashville, Dallas, Houston, Phoenix or Denver,” he said. “[If you are] everywhere else. It's really hard to get anything done right now.”
Freitag also showed a forecast by chain scale that continues to show a bifurcated state with luxury winning and economy struggling, but with one notable surprise: All segments, including economy, are projected to show positive RevPAR in 2026. He also noted the continued strength of the middle of the chain, especially upper midscale and midscale.
Counting on Tailwinds
Adam Sacks, president of U.K.-based Tourism Economics, set the table for the hospitality economics discussion by pointing out the various tailwinds (geopolitical uncertainty, rising inflation, a softening labor market, diminished international inbound to the U.S., and high fuel costs). But he also painted an optimistic picture for the rest of the year.
“Travel continues to prevail,” he said. “Despite the turbulence that we see, we do expect tailwinds to prevail.”
As proof, Sacks pointed out positive momentum in international inbound, especially with the World Cup this summer. “We're going to start to see modest growth in international travel in the U.S.,” he said. “We're going to go from that drag on room demand that we had in 2025 to at least net a slight positive.”
Sacks also said Tourism Economics holds the view (as do notable airline CEOs) that higher air fares are unlikely to cause a pullback in air travel.
Revenue Opportunities
Michael Grove, CEO of U.K.-based Hotstats, said margins have continued to erode over the past few years but have increased so far in 2026.
Grove said it’s interesting to note that despite positive news for room growth this year, it’s actually the slowest growing area of hotel performance (+4.2 percent year-over-year) compared to ancillary revenue like F&B (+4.5 percent YOY), golf (+9.2 percent), wellness (+5.6 percent) and conferences and events (+6.3 )percent. He said the ongoing uptick in conferences and events is an incredibly strong story for hotels, especially with major events on the horizon.
“We have so many major events in the country this year that we should continue to see that grow,” he said, pointing to the relative strength of all the non-room categories. “This is a real focus point for me that I think hoteliers need to concentrate on. RevPAR growth is great … but guests actually spend a lot more on property, and we should be maximizing that in order to be able to offset these cost challenges that we're going to continue to see.”
Importance of Travel
Robert O’Leary, deputy assistant secretary for travel and tourism at the National Travel and Tourism Office, which is part of the U.S. Department of Commerce, began by explaining what NTTO does and how important travel is to the current administration.
“Travel is America's largest service export. When someone comes to the United States and spends money, we count that as an export. … It's a really strong engine for the economy. … What we want to do in Washington, in collaboration with the industry, is to make sure the travel industry speaks with one strong voice.”
Brett Horton, chief advocacy officer for the American Hotel & Lodging Association, said he’s been hearing mixed messages from the organization’s members about the World Cup.
“We commissioned a report that was out recently that showed bookings are trailing early forecasts,” he said, citing some state and local policies at some of the host cities that may discourage visitors. “There are perceptions that these are barriers, and the administration is trying to address some of those. Those are all things that could possibly be driving down the excitement of the event,” he said.
But Horton noted that this can also be a learning experience for the country, especially with major events like the 2028 Olympics and Paralympics in Los Angeles on the horizon.
“The World Cup is not quite as much of a boost as maybe we originally thought, but there are certainly so many events over the next decade that this can be a lesson. What else can we do?”