STR President Amanda Hite on the 2025-2026 Hotel Outlook

Josiah: In this episode, recorded August 7, 2025, STR President Amanda Hite shares her latest forecast for hotel performance. Wherever you are in the hospitality ecosystem, I think this is important to know so that you can be prepared to serve all of the stakeholders you have, from guests to associates to investors and others. Let's get into it. 

[intro]

Josiah: I wonder if you could share a little bit about what you're seeing in hospitality and hotels specifically right now.

Amanda: Well, not surprisingly, we always update our forecast and release a revised forecast at Hotel Data Conference. And we did revise the forecast for RevPAR growth for this year and next year down. I think everyone knows what's going on in the industry when you're in it, but I delivered the number for 2025 and there was an audible gasp in the audience, which was a little shocking. We took 2025 RevPAR growth to negative 0.1%. So let's call it flat for the year. And we did bring down the outlook for 2026 to 0.8% RevPAR growth. The big shifts are a couple of things. We do expect demand to go slightly negative this year, so demand growth going negative 0.1%. Certainly not what we, at the beginning of the year, thought would happen. But average daily rate growth has slowed, and we're seeing a deterioration in rate growth, especially in that upscale, upper mid-scale segment that had been holding their own through the end of the year, through the first quarter. And as demand started to soften, we really started to see a pullback in demand and rate in those mid-tier select service segments. So those are the impacts. The good news is if you're a luxury hotel, luxury's faring okay. And we do expect to see positive RevPAR growth in the luxury segment between now and the end of the year. But when we look at the second half of this year, that's really the only bright spot. It's going to be a tough next six months for sure. It's very bumpy. We've got very difficult comps in the fourth quarter and the first quarter because they were so positive last year. This year in the first quarter, we had wildfires in LA that helped lift demand. We had hurricane demand impact from hurricanes in the fourth quarter that the demand impact was still positive there in the first quarter. We had an inauguration in the first quarter that helped lift demand. That's going to make first quarter of next year much tougher. But then we expect things in 2026 to start to turn a little more positive. The back half of 2026 is where we will see more growth. I mean, we're not talking about huge growth, right, with 0.8% for the year, but where we see the growth come will not be until the second half of next year.

Josiah: It was really remarkable to see the charts that you shared. I highly recommend the Hotel Data Conference. I was telling people, this is my favorite show on the circuit because it dives deep into so much. And people need to sign up for next year. If they're not signed up, you have 170 people on your wait list, right? You got to sign up. So make sure that you're here next year. But I really appreciated this. It's remarkable looking at those charts, luxury showing better performance, and then you go down the chain scales to economy and progressively worse performance. You mentioned it's bumpy now. Short-term outlook doesn't look good. But looking forward, you expect things to turn around. Why is that? Why do you anticipate things will turn?

Amanda: This is a downturn in the economy, right? I've said this isn't COVID. This isn't Great Recession. It's not an outside impact. This is a slowing economy because of, I mean, I guess the outside impact is tariffs, it is the impact of what's happening in our macro environment, but we've all lived through a slowing economy for our industry. The economy slows down, things slow in the industry, and then it will turn and start to pick back up. We've seen over the last three or four months, businesses have just stalled. Nothing is happening because there's so much uncertainty in the macro environment that companies are saying, time out, let's just pause and wait. We're not making capital investments. We're not going to spend on travel. We're going to cut the number of people going to a conference because we just don't know what's going to happen in the world. And I think now that the tax bill has been passed and we start to see that implemented, companies feel more confident in what's happening. So we'll start to see capital expenditures start to flow, which will absolutely help people start to hopefully feel more confident to release that business travel, going to conferences.

Josiah: I'd love to hear you speak a little bit more to those demand segments because I feel like I have a personal interest in seeing some of this unfold. I am very interested in, there's talk about groups, all these different segments. Which segments are you looking at and most curious about how they unfold in the coming months?

Amanda: Group is definitely one that we're paying attention to because as we began the year, group was the solid segment. It's been growing. We were getting back to where we were in 2019 for group, but we had seen month over month gains in group demand. So we felt really solid about group. The last three months, group demand has been down from same month last year. Now, group ADR is strong and that's been helpful, but we hope that group picks back up in the fall. That is the expectation and what we're hearing from clients, what we see in forward booking is we're not overly concerned that there's a falloff of group, but we're certainly watching it closely because what we have heard is group attendance. So, groups are happening, but the attendance is down in group meetings. It's what we have heard anecdotally from clients. The international inbound has, when you have a big citywide meeting that has international component to it, most of the organizers in multiple cities, not just any one city, are saying the international attendees of the citywide convention is down 10% in some cases, which aligns with looking at international arrivals generally are down. So I think group is certainly something we're watching because we need group. Every hotel depends on a certain amount of group for the foundation. Even in a select service, in an upscale segment, you've still got group business that's going there. And that is a fundamental part of the foundation of building out your revenue strategy is knowing that you're going to have that demand. So that is something that we are watching closely. And of course, looking ahead to 2026, international, we didn't expect to be up tremendously in 2025 anyway. We thought we were stable. We thought international would be more a 2026 event in terms of international inbound with the World Cup. There's a lot of hopes pinned on that. There's a lot of questions about that. We're watching and we're going to spend some time digging into previous World Cups and the demand, what the makeup of international has been. We have a lot of headwinds against us for international with World Cup coming next year in terms of the visa fees and just the general sentiment of international travelers wanting to come to the U.S. But what we typically see with World Cups, it's not actually so much about huge occupancy gains in the markets where we've had World Cup, it's ADR gains. And of course, international visitors pay more. Typically, they spend more money when they're here. So that will be something we watch and we dig into that. Expect to hear some more analysis from STR over the next few months about what we're thinking for World Cup demand or demand for hotels around the World Cup time period and markets.