CoStar and Tourism Economics have revised their outlook for the US hotel sector for 2026–27, upgrading expectations for average daily rate (ADR) and revenue per available room (RevPAR) as demand conditions continue to outperform earlier assumptions.
For 2026, ADR projections have been lifted by 1.0 percentage point, while RevPAR has been upgraded by 2.2 percentage points. In a notable shift from the previous forecast, occupancy is now expected to post year-on-year growth, rather than the earlier anticipated decline of 0.3%.
The revision reflects stronger-than-expected performance across both group and transient demand segments, supported by sustained travel activity in the first part of the year.
“The cautious optimism that framed our outlook earlier in the year has made way for a more robust forecast, driven by stronger demand from both the group and transient segments,” said Jan Freitag, national director of hospitality analytics at CoStar Group.
He noted that US hotels have recorded sustained momentum, with room demand up by more than 8 million room nights year over year through the first four months of 2026. While growth is expected to moderate for the remainder of the year, Freitag said it remains strong enough to support continued gains in both ADR and RevPAR, although increases are likely to trail inflation.
Demand resilience is also being underpinned by broader economic conditions, according to Tourism Economics.
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“Travel activity appears resilient heading into the summer,” said Aran Ryan, director of industry studies at Tourism Economics. “Stable job markets and rising household wealth are supporting leisure travel demand despite higher fuel prices.”
He added that group travel is improving in line with strong corporate profitability, while international inbound demand remains relatively soft. However, there are expectations that major events, including the FIFA World Cup, could provide a future uplift.
Looking ahead, easing inflation is expected to offer additional support to the wider economy, potentially strengthening travel demand further into 2027.
Profitability in the hotel sector is also forecast to rise, driven primarily by growth in room revenues. However, cost pressures remain a key concern.
“GOP is expected to rise on increasing total revenues, with the largest growth contribution coming from the rooms department,” Freitag said. “However, expenses are anticipated to grow at a higher rate, resulting in a continued squeeze in profit margin.”
