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The United States hotel industry experienced mixed performance during the week ending 22 February 2025, according to data from CoStar, a leading provider of real estate information and analytics.
The industry's occupancy rate declined by 2.7% compared to the same period in 2024, settling at 60.3%.
However, the average daily rate (ADR) increased by 2.5% to $159.90, while revenue per available room (RevPAR) saw a slight decrease of 0.3%, reaching $96.49.
Regional variations in hotel performance
Among the top 25 markets, performance varied significantly. Los Angeles reported the most substantial increases, with occupancy rising by 10.4% to 74.8% and RevPAR increasing by 16.7% to $147.34.
New Orleans was the only market to achieve a double-digit lift in ADR, which grew by 10.9% to $197.41.
Conversely, Las Vegas experienced the steepest declines across all three key performance metrics: occupancy fell by 14.3% to 69.6%, ADR decreased by 8.4% to $170.83, and RevPAR dropped by 21.4% to $118.86.
Factors influencing market performance
Several factors contributed to these regional disparities.
In Los Angeles, the increase in occupancy and RevPAR can be partly attributed to events such as the 30th annual LA Art Show, which was held a week later this year, leading to an easier comparison with the previous year.
The Hollywood/Beverly Hills submarket, which had been experiencing negative RevPAR comparisons since the wildfires, posted a 9.5% growth in RevPAR during this period.
Additionally, Los Angeles Central Business District saw a 47% rise in RevPAR, influenced by the rescheduled art show.
In contrast, Las Vegas's performance declines were partly due to a shift in the conference calendar. As a market that represents about 3% of all U.S. hotel supply, significant changes in Las Vegas's performance have a noticeable impact on national figures.
Industry outlook amid economic considerations
The mixed performance of the U.S. hotel industry in late February 2025 reflects broader economic considerations.
Some U.S.-based travel companies, including Marriott International and Booking Holdings, are preparing for layoffs and budget cuts ahead of 2025 due to decreased leisure travel demand from lower-income consumers, affecting hotel business growth.
Real estate analytics firm CoStar and global travel data firm Tourism Economics have downgraded their 2025 room revenue growth forecast to 1.8% from 2.6%.
Despite these challenges, certain segments of the industry show resilience. Group travel, notably corporate retreats and conferences, is revitalizing the hotel industry, which has been struggling with a slowdown in other travel sectors.