Hospitality Investing News - Southeast June 2025

The U.S. hotel industry reported mixed performance results year-over-year in May 2025. Overall, the U.S. hotel industry experienced a 4% year-over-year RevPAR increase, the strongest since March 2023, driven by a 1.0 percentage point occupancy rise to 63.1% and ADR growth of 2.1%–2.4%. However, most of this gain was seen in luxury and upper-upscale hotels who continue to outperform with the added strength to group and business travel and top markets like Chicago and New York. For the remainder of 2025, the U.S. hotel industry is expected to be in a slow-growth mode, with forecasts predicting modest increases in ADR and RevPAR, with CoStar and Tourism Economics projecting a 1.6% increase in ADR and a 1.8% increase in RevPAR for the full year, which is still under the most recent inflation data. The American Hotel & Lodging Association (AHLA) projects 2025 U.S. hotel occupancy to reach 63.38%, slightly below 2019 levels. One main factors influencing this outlook are the improvements in group and business travel, but most of this improvement is being absorbed by higher-end hotels. However, headwinds exist, such as slowing domestic leisure growth due to inflation, declining consumer sentiment, reduced business spending , and higher operating costs impacting profit margins. Potential policy impacts and geopolitical uncertainties also introduce unknown potential downside risks.