Us Hotel Markets Struggle As Only Thirty Five Per Cent Post Revpar Growth In Cbre’s August 2025 Outlook

Published on August 15, 2025

By: Tuhin Sarkar

The US edifice manufacture is showing signs of strain, pinch caller information from CBRE’s August 2025 State of nan Union revealing that only 30 5 per cent of tracked edifice markets managed to station RevPAR maturation successful June. This is nan lowest stock of increasing markets seen astatine immoderate constituent successful nan post-pandemic recovery, raising concerns for operators and investors alike. While pockets of resilience stay — peculiarly successful nan luxury conception — astir different categories are facing declines successful occupancy and sluggish complaint growth.

The broader economical situation is adding pressure. Inflation is proving stubborn, pushing costs higher and eroding profit margins, moreover arsenic costs maturation and employment figures stay comparatively strong. Many consumers still person disposable income to travel, yet this has not translated into a wide boost successful edifice revenues. Compounding nan challenge, short-term rentals proceed to seizure a increasing stock of nan lodging market, further intensifying competition.

International recreation patterns are besides weighing connected performance. Inbound visitant numbers to nan US fell again successful June, while outbound recreation by Americans increased. This imbalance is peculiarly problematic for hotels successful awesome gateway cities that dangle heavy connected world guests. At nan aforesaid time, while TSA rider throughput has improved slightly, and online searches for firm and loyalty recreation are connected nan rise, nan effect connected revenues has yet to materialise.

Together, these factors awesome a hospitality assemblage caught betwixt resilient user liking and structural headwinds, wherever only a mini fraction of markets are presently uncovering existent growth.

U.S. Hotels See Slowing Growth Amid Economic Pressure

Only 35% of U.S. edifice markets reported RevPAR maturation successful June 2025, according to CBRE’s latest State of nan Union. Inflation, anemic occupancy, and slowing request person mixed to compression nan hospitality sector. While employment and wages stay strong, this has not translated into robust edifice gross growth. Luxury hotels are nan exception, signaling a 2.8% emergence successful RevPAR, but astir different segments saw declines. The sluggish inclination signals that nan post-pandemic betterment momentum is fading successful galore markets.

Economy Weakens arsenic GDP Forecasts Are Cut

CBRE has reduced its 2025 GDP maturation forecast from 1.9% to 1.5%, citing slowing momentum contempt a beardown 2nd quarter. The 2026 forecast besides fell to 1.8%, good beneath nan semipermanent mean of 2.1%. Inflation is expected to stay higher for longer, pinch CPI maturation now forecast astatine 2.9% for 2025 and 3.0% for 2026. This persistent ostentation is expected to proceed pressuring edifice profits and margins. Wage maturation has outpaced ostentation by 101 ground points, suggesting consumers person immoderate capacity to spend, but it has yet to importantly boost edifice demand.

Lending Trends Shift pinch Lower CMBS Volumes

The commercialized mortgage-backed securities (CMBS) marketplace has slowed sharply. June 2025 saw conscionable $0.9 cardinal successful issuance compared pinch $2.9 cardinal a twelvemonth earlier. The number of loans dropped from 45 to 14 year-on-year, though nan mean indebtedness size grew from $63.2 cardinal to $68.5 million. CMBS rates roseate to 7.8%, and in installments spreads widened by 50 ground points, reflecting tighter lending conditions for edifice projects. This could slow caller developments and renovations, impacting semipermanent manufacture capacity.

RevPAR Declines Despite Slight ADR Gains

In June, RevPAR fell 1.2% year-on-year arsenic a 0.4% summation successful mean regular complaint (ADR) could not offset a 1.7% driblet successful occupancy. Luxury hotels managed gains, but different concatenation scales knowledgeable gross declines. The information underscores nan situation of filling rooms astatine higher rates successful a competitory and inflationary environment. Many operators are facing rising costs that outpace gross gains, putting unit connected profitability.

Short-Term Rentals Take Larger Market Share

Short-term rentals (STRs) are capturing much of nan accommodation market. Their stock of full request climbed to 14.6% successful June, up from 13.9% successful 2024 and 10.6% successful 2019. STR RevPAR grew 5.8% year-on-year successful June, pinch ADR reaching 142% of 2019 levels. Occupancy dipped somewhat from 102% to 101% of 2019 levels. This displacement towards STRs continues to situation accepted hotels, particularly successful municipality and leisure markets.

Margins Under Pressure Despite Profit Growth

Hotel operating profits grew 1.4% successful May, somewhat beneath nan year-to-date gait of 1.5%. Revenue roseate 2.1%, but margins contracted by 0.1 percent points arsenic ostentation kept costs high. Insurance costs person started to stabilise, yet different operating expenses stay elevated. CBRE warns that without stronger gross growth, profitability could weaken further done 2026.

International Travel Declines While Outbound Trips Rise

Inbound world recreation to nan U.S. fell 3.4% successful June, while outbound world trips by U.S. residents roseate 0.6%. This imbalance reduces edifice request successful gateway cities and celebrated tourer destinations. CBRE expects nan inclination to persist arsenic traveller sentiment shifts, creating ongoing headwinds for nan home hospitality market.

TSA Throughput Rises but Impact Limited

July saw TSA throughput emergence 1.1% year-on-year for nan first clip successful months. Lower airfares and costs maturation should support travel, yet RevPAR trends stay weak. Encouragingly, Google searches for firm recreation and loyalty programme redemptions roseate 7% and 9% respectively successful July, hinting astatine imaginable betterment successful business and leisure recreation request this autumn.

Outlook – Recovery Faces Strong Headwinds

The operation of inflation, anemic occupancy, and rising title from short-term rentals is dampening edifice marketplace recovery. With conscionable complete one-third of markets seeing RevPAR growth, nan manufacture faces an uphill battle. While pockets of spot beryllium successful nan luxury conception and prime municipality markets, astir operators will request to navigate costs pressures and evolving request patterns cautiously done nan remainder of 2025 and into 2026.