CBRE Forecasts Modest Growth in Hotel Revenue for 2025, Driven by Urban Centers

CBRE is predicting a slight increase in hotel revenue per available room (RevPAR) for 2025, driven mainly by urban areas and regional leisure spots. The forecast includes a 1.3% rise in RevPAR, with occupancy levels up by 14 basis points and the average daily rate (ADR) increasing by 1.2% year-over-year.

The company’s outlook takes into account a projected 1.4% GDP growth for the year, down from the previous estimate of 2.4%, and an expected 2.9% inflation rate. Despite slower economic growth projections, CBRE remains positive about the lodging industry’s performance.

Factors such as an increase in group and business travel, a weaker U.S. dollar, and lower airfares are expected to boost domestic and international travel, benefiting urban hotels, regional resorts, and drive-to destinations. CBRE’s Head of Hotel Research and Data Analytics, Rachael Rothman, predicts RevPAR growth to range between 1.0% and 3.0% in the coming years.

Although economic growth and demand for hotels are expected to slow down, supply growth is also projected to decrease due to rising construction costs, higher financing rates, and a tight labor market. CBRE expects supply growth to average 0.8% annually over the next four years, half of the industry’s historical average.

CBRE has included 11 new leisure-focused markets in its latest forecast, reflecting changing travel trends and uncovering new opportunities such as Boulder and Colorado ski areas, California wine regions, the Florida Panhandle, and Utah national parks.