CBRE (NYSE: CBRE) is predicting a vibrant 2025 for the US hotel industry with a new forecast that expects revenue per available room (RevPAR) to enjoy steady growth throughout the year.
CBRE is forecasting a 2.0% increase in RevPAR growth this year, with occupancy improving by 23 basis-point (bps) and average daily rate (ADR) increasing by 1.6%. CBRE stated the projected growth affirms the ongoing recovery of the lodging industry, with RevPAR expected to be 16.6% higher in 2025 compared with pre-pandemic levels in 2019.
CBRE’s baseline forecast also includes a 2.4% GDP growth rate and average inflation of 2.5% for 2025. Urban locations are expected to continue to outperform thanks to group and business travel and the continued recovery of inbound international travel.
“The US hotel market is poised for steady growth in 2025, primarily led by continued outperformance of the urban segment, which should experience RevPAR growth of 2.8% this year,” said Rachael Rothman, CBRE’s head of hotel research and data analytics. “The sector’s resilience and the sustained demand for higher-priced hotels bode well for the upcoming year.”
CBRE also predicted restrained supply growth due to high financing and construction costs, averaging less than 1% over the next three years. Factors that would impact the sector include potential new tariffs, labor shortages, and the Federal Reserve pausing on further interest rate reductions.
“Despite existing cost pressures, the US hotel market fundamentals remaining robust, we anticipate a resurgence in investment activity in the latter half of 2025,” added Bill Grice, president of CBRE hotels in the Americas. “With ample dry powder available and the potential for a lower Fed funds rate before year-end, we expect to see a narrowing of buyer and seller expectations, fueling increased transaction activity.”
