Hospitality Investing News - Southwest June 2025

The U.S. hotel sector entered this spring at a potential inflection point. Inflationary concerns, a softening labor market and general economic uncertainty are lowering consumer and corporate confidence, which are likely to adversely impact future domestic leisure and business travel. Geopolitical issues related to White House policies are also poised to alter international travel demand. Meanwhile, hotel construction activity is picking up. Developers will add more than 100,000 keys to inventory this year for the first time since 2021. Higher-earning households may be able to absorb the added costs likely to face consumers this year and continue traveling, helping luxury, upper-upscale and upscale hotels potentially build upon occupancy gains from last year. Declining occupancy among economy and midscale flags observed in 2024, however, may be an early indicator of what is to come this year. Select- and full-service establishments should also benefit from group travel, as the number of U.S. conventions scheduled for this year rivals pre-pandemic numbers.