On Tuesday, as part of the Americas Lodging Investment Summit (ALIS) in Los Angeles, CoStar and Tourism Economics made minor adjustments to growth projections for their first U.S. hotel forecast for 2025.

For 2025, projected gains in ADR (+1.6%) and RevPAR (+1.8%) were unchanged from their final forecast of 2024, while occupancy for the year was raised 0.1 points to 63.1%.

While the overall numbers didn’t shift, there are some differences with how the forecast now views 2025, STR President Amanda Hite told Hotel Investment Today.



She said demand coming out of Q4 2024 and heading into 2025 was stronger than expected and was largely driven by disaster-related occupancy gains in places like Tampa and in 12 other tertiary markets in Florida, western North Carolina and Georgia.

“There’s a lot of occupancy gains going into the year that were not necessarily ADR-driven,” Hite said. “Overall, the growth for the industry [in 2025] will still be more ADR-driven than occupancy-driven. We just shifted the growth into the first half.”

Demand is still strong, Hite said. Luxury is still the highest-performing segment (the forecast moved the chain scale slightly up in 2025), while midscale was moved down.

“Midscale is the only segment we expect to see negative RevPAR for this year, and that is because of new supply. We’ve got a lot of new supply coming in,” she said, noting that’s not all just coming from extended-stay, “We’ve seen a lot of development in that segment.”



The forecast also projects higher gross operating profit per available room (GOPPAR) for the U.S. in 2025, which is something Hite said she’s already hearing about.

“I’ve gotten some pushback from people saying, ‘There’s no way our profits are going up because our costs are still increasing,’ but expenses are going to stabilize this year,” she said.

In 2024, the industry saw double-digit increases in expenses across the board, and Hite said the projection is showing that isn’t happening in 2025.

“What we’re seeing in the data is that people are deciding, ‘Hey, we’re going to do more with less.’ They’ve moderated their labor hiring and are using technology or trying to control wage increases,” she said.

Hite admitted that the projection has a downside risk in 2025 that could make it inaccurate.

“Yes, costs are stabilizing, but you still have the pressures depending on what happens with inflation. You could see it going one way or the other,” she said.

While profits are projected to be better overall in the U.S. in 2025, Hite said that is still very dependent on the market.

“It’s a very different story, depending on where you are for a lot of owners,” she said. “They’re saying we’re not going to increase profits. In fact, our profit margins might go backward. So, our forecast definitely has more opportunity for downside and for us to miss it and be wrong.”

Group demand is driving a lot of the projected growth, Hite said, and that demand is coming from the top 25 markets. In fact, she said from a revenue perspective, 44% of the increases will come from just three markets: New York City, Orlando and Washington, D.C.