Industry analysts are warning of a potential "hotel recession" in the U.S., with lodging performance metrics in an extended slump.
Isaac Collazo
On the latest episode of Tell Me More: A Hospitality Data Podcast, co-hosts Isaac Collazo of STR and Jan Freitag of CoStar Group reported that U.S. revenue per available room (RevPAR) growth is at just 0.2% this year, the lowest level on record excluding recessionary periods and 2020, when the pandemic struck.
According to Collazo, August marked the third consecutive month with RevPAR declining 1% or more. Additionally, U.S. average daily rate (ADR) has lagged inflation in 23 of the past 36 months.
"It is the longest streak that ADR has been below the rate of inflation since the Great Recession," said Collazo, STR's senior director of hospitality analytics.
The hotel industry's declining performance comes while the broader economy shows continued stability, with Freitag, CoStar Group's director of hospitality analytics, citing a relatively "steady" unemployment rate as well as an Oxford Economics and Tourism Economics report forecasting GDP growth of 1.9% for 2025.
"There's not a recession in sight," said Freitag. "And then, we are sitting here looking at our data and saying, 'Growth? What growth?' So, it's so interesting how we are somewhat disconnected from what the macro environment is."
Jan Freitag
CoStar data also indicates that it's the Top 25 U.S. markets that are driving the decline. Collazo said that those major markets posted a RevPAR decline of 3% in August, versus 0.4% growth across all other U.S. markets.
When asked about what would constitute a true hotel industry recession, Freitag said that two consecutive quarters of RevPAR decline could define one.
Collazo added that the current environment defies traditional forecasting.
"Everything I thought I knew, I don't anymore," he said. "Everything we thought we knew that you could forecast and think through -- it's not happening."