NASHVILLE, Tennessee — For U.S. hotels, the recovery of group demand has helped counterbalance softer transient travel across 2024.
Could group demand continue to surge in 2025? Likely yes, but Kelsey Fenerty, manager of analytics at STR, said at the Hotel Data Conference that the next full year will be “pivotal.”
As hotels and short-term rentals such as Airbnb compete for the leisure traveler's dollars, business travelers and guests in corporate groups are still far from being a serious threat to leave hotels, Fenerty said.
“The corporate guest is not so interested [in short-term rentals]. They like their room service, paying straight into their corporate accounts,” she said.
Another reason this is key, at least for the U.S. hotel industry, is that corporate travelers do not take as many outbound, international trips for meetings, incentives, conventions and expositions business.
Fenerty said this pivotal group is staying domestically, and that it is a “new” untapped source of demand. With a majority of companies bringing their employees back into the office — and close to historical levels — the number of in-person meetings and other events that require travel and hotel stays is only going to grow.
There are several factors also playing into the next 18 months, Fenerty said. Namely, events such as major sports tournaments are back. The U.S. economy's direction is still playing out. Thursday is the one night for hoteliers to watch carefully as to whether to pull pricing and demand levers, and non-rooms revenue matters more than ever.
The hotel industry is also thinking more about the complete stay experience as total revenue per available room has become a major metric. Guests are prepared to pay more for experiences than they are for room nights in many cases.
“Expect more RevPAR growth than in 2024, which is good, and a little more still in 2026, but that will be rate-driven,” Fenerty said.
She added that the U.S. should not expect massive gross domestic product growth.
“But it is not negative. The U.S. is at the top of [economic performers] and always performing well,” she added.
Healthy and Wealthy
There will not be the breathtaking increases in the major U.S. hotel performance metrics, but the U.S. traveler remains healthy and mostly wealthy. New hotel supply also remains low to the benefit of existing hotels.
“Demand trends are very stable, and the U.S. is not changing its demand levers over time. … And we are not oversupplied,” Fenerty said. “In 1987, there were 80 people in the U.S. per hotel room. In June 2024, that number is 60. It is sustainable supply, increasing by 1.6% growth annually, not too much and in line with population growth.”
She added week-over-week demand growth continues over time to follow the same pattern in which the first date of any week is the same.
Where there will be volatility is in average daily rate, though that volatility equals opportunity, she said.
“The biggest change is how the ADR premium per day of week has shifted over time. … We will see more volatility in ADR than we will have in demand, perhaps more today than in the past,” Fenerty said.
She did emphasize that even though ADR growth will slow down across 2025, it will still be growing.
In the first quarter 2025, STR — CoStar’s hospitality analytics division — and Tourism Economics forecast that U.S. hotel occupancy will grow 2.2% year over year, ADR will increase 2.3% and RevPAR will grow 3.5%.
Things To Watch for in 2025
Fenerty underlined what she saw as the key narratives being played out across 2025.
- Leisure travel slowdown: 2025 will be a turning point due to credit-card debt. When that is combined with some GDP wobbles, it will produce more guests that become price-sensitive to hotel rates. This could in turn lead to stronger weekend demand and softer weekday demand, and increasing competition for share of wallet.
- International trips to and from the U.S.: International outbound demand has returned to pre-pandemic levels as Americans travel abroad. But inbound demand to the U.S. might score an own-goal in 2025 as many international travelers wait to 2026 to come to the U.S. to attend soccer’s 2026 FIFA World Cup; games are also being held in co-hosts Canada and Mexico. If the 2026 FIFA World Cup is anything like the hotel demand generated by the Euro 2024 tournament held in Germany, which Fenerty called “amazing,” it could be cause for celebration for North American hoteliers.
- Seizing on experiences: The experience culture will continue, especially for off-the-map destinations, and domestic demand might prosper from the U.S. having lots of space. Overtourism in Europe, notably in such places as Amsterdam, Barcelona and Venice, is a real problem and might deter outbound travelers who have seen news reports of locals protesting against vacationers.
- Back to office: This new phenomenon is largely complete, as the U.S. corporate traveler is the one group that has yet to book internationally.