If the forecast for 2024 hotel performance was "partly cloudy," this year's "still cloudy but with more peeks of sun" is definitely an improvement.
That's the take from Tell Me More: A Hospitality Data Podcast hosts Isaac Collazo and Jan Freitag. The two share early takes on 2025 hotel industry topics to watch in a special bonus episode of the podcast.
Heading into 2025, the watchword is "uncertainty," said Collazo, STR's VP of analytics.
"There's always uncertainty, but right now there's a lot more uncertainty because we don't know what the new administration will do," he said, referring to incoming U.S. President Donald Trump's administration. It's an element that STR and Tourism Economics can't build into official industry performance forecasts quite yet.
The firms right now predict revenue per available room will increase 1.8% this year, slightly better than 2024 numbers. And most of that growth will come through average daily rate, even though that number continues to lag inflation.
While hotel supply growth continues to happen below the long-term average of 1.3%, Collazo said it should tick up this year by 0.9%.
But the sun is peeking through, he said.
"I believe — and I think this will actually happen — room demand sets a new annual record for the industry" in 2025, Collazo said.
Still though, catching 2019 peak performance levels remains elusive — a fact Collazo said is understandably frustrating.
"I know people are tired of hearing about 2019. Why do we talk about it? Because we haven't won the race yet," he said. "You've got to get to the finish line. We're not at the finish line."
CoStar Group's national director for hospitality analytics Freitag said one ray of sunshine in 2025 for him will be the continued strength of small meetings.
But international inbound travel to the U.S. is another persistent cloud hanging over 2025, Freitag said.
"I just don't see it," he said. "I think the dollar is going to continue to be very strong, making the United States just very expensive to come to from Europe and Asia, and I think the number of international travelers to the U.S. will still be below ... the prior peak."
On the sunny side, both agree that luxury and even ultra-luxury hotels that command rates of $1,000 per night or more will continue to thrive. And high-end travelers drive the persistent trend of experiential travel.
"These people want to stay somewhere nice because they don't need another jet, they don't need another watch, they don't need another car, but what they need are experiences," Collazo said.
Freitag made the parallel between high-end travel and the rise of luxury hotel transactions, which began in earnest in 2024 and should continue.
"I think luxury hotels will continue to trade at a brisk pace, especially in the United States. If you can park your foreign currency in U.S. dollars, you may get the appreciation in the dollar and the asset," he said. "So I'm predicting that transaction volume in the United States will increase."
But the cloud of inflation continues to persist, both said, and tied to it is the uncertainty of a new administration.
"It all depends what happens to the economy," Collazo said. "Some of what we've heard from the new administration is tariffs and deportations that will cause inflation. If inflation does rebound ... to the 4% and 5% levels, then you're not going to see those interest rate cuts. They're not as likely. So it depends on what actually materializes."
For more of Collazo and Freitag's predictions for 2025, listen to the podcast above.