US RevPAR will decline in 2025: CoStar, Tourism Economics – Hotel Dive

U.S. Hotel Sector Economic Forecast: A Sustainable Development Goals Perspective

Executive Summary

A revised economic forecast for the United States hotel sector, issued by CoStar and Tourism Economics, indicates a significant downgrade in growth expectations for 2025 and 2026. The projections, which anticipate a decline in Revenue Per Available Room (RevPAR) in 2025, present considerable challenges to the industry’s capacity to contribute to the United Nations Sustainable Development Goals (SDGs). This report analyzes the forecast’s implications, with a specific focus on SDG 8 (Decent Work and Economic Growth), SDG 12 (Responsible Consumption and Production), and SDG 17 (Partnerships for the Goals).

Revised 2025 Performance Forecast and Impact on SDG 8

The updated forecast for 2025 reflects growing economic uncertainty and inflationary pressures, directly impacting the hospitality sector’s role in promoting sustained and inclusive economic growth as outlined in SDG 8. The projected downturn threatens job security and the industry’s economic vitality.

• Occupancy: The full-year 2025 forecast has been lowered by 0.2 percentage points to 62.3%.
• Average Daily Rate (ADR): The growth outlook is held steady at 0.8%, a rate significantly below inflation, which puts pressure on operational margins and the ability to provide decent wages.
• Revenue Per Available Room (RevPAR): The forecast is now for a 0.4% year-over-year decline. This marks the first projected full-year RevPAR decrease since the crisis years of 2020 and 2009, signaling a contraction in economic performance that directly challenges the objectives of SDG 8.

Key Economic Challenges and Their Relation to SDGs

Several macroeconomic headwinds are responsible for the revised outlook. These challenges have direct consequences for the industry’s alignment with multiple Sustainable Development Goals.

1. Rising Operational and Labor Costs: Higher expenses, particularly in food and beverage (F&B) and labor, are projected to lower gross operating profit per available room (GOPPAR). This financial pressure complicates efforts to ensure decent work and living wages (SDG 8) and necessitates greater efficiency and waste reduction in line with SDG 12 (Responsible Consumption and Production).
2. Consumer and Policy Uncertainty: A softening job market, rising prices, and policy instability act as drags on consumer spending. This economic strain poses a risk to the industry’s stability and its ability to provide secure employment, potentially impacting progress toward SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities).
3. Pressure on Profit Margins: With ADR growth failing to keep pace with inflation, hotel profit margins are under significant pressure. This constrains the financial capacity of businesses to invest in sustainable technologies, infrastructure, and employee development programs that are crucial for long-term resilience and SDG attainment.

Outlook for 2026: Opportunities for Sustainable Recovery

The forecast for 2026 has also been downgraded, though it projects a modest return to growth. This period presents an opportunity for the industry to rebuild on a more sustainable foundation.

• 2026 Projections: The growth outlooks for occupancy, ADR, and RevPAR were lowered by 0.3, 0.1, and 0.3 percentage points, respectively. A slight RevPAR increase of 0.5% is now expected.
• International Collaboration and Events: An expected increase in global long-haul travel and interest in the FIFA World Cup 2026 offer a pathway to recovery. These events provide a platform to strengthen international cooperation and promote sustainable tourism, directly supporting SDG 17 (Partnerships for the Goals).
• Economic Stabilization: Projections of continued household income growth, resumed hiring, and reduced policy instability in 2026 could create a more favorable environment for the travel economy to firm up, thereby renewing the sector’s positive contributions to SDG 8.

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 8: Decent Work and Economic Growth

  The article is fundamentally about the economic health and growth prospects of the U.S. hotel industry, a significant component of the tourism sector and a major employer. It discusses key economic challenges such as inflation, rising operating costs, and broader economic uncertainty, which directly impact the goal of promoting sustained, inclusive, and sustainable economic growth. The text also explicitly addresses employment issues, including rising unemployment and labor costs, which are central to the “decent work” aspect of SDG 8.

2. What specific targets under those SDGs can be identified based on the article’s content?

SDG 8: Decent Work and Economic Growth

1. Target 8.1: Sustain per capita economic growth

   The article directly addresses this target by discussing the downgraded economic growth outlook for the U.S. hotel industry. The forecast of a decline in RevPAR (Revenue Per Available Room) by 0.4% in 2025 signifies a contraction in economic performance for the sector. The mention of “broader economic uncertainty,” a “softening job market,” and ADR growing “well below the rate of inflation” all point to challenges in sustaining economic growth within this industry.

2. Target 8.5: Achieve full and productive employment and decent work

   This target is identified through the article’s discussion of the labor market. The forecast mentions that they “expect little change in the macroeconomic environment as unemployment and prices continue to rise.” Furthermore, the text highlights that “labor costs will be slightly higher in 2025” and were a “top concern among hospitality professionals,” directly connecting to the themes of employment levels and the cost of labor, which are integral to achieving decent work.

3. Target 8.9: Promote sustainable tourism

   The entire article is centered on the economic viability of the hotel and tourism industry. It analyzes performance metrics and future outlooks for this sector. The discussion of “improving international inbound travel fundamentals” and “expanding global long-haul travel” as opportunities for the industry directly relates to the promotion of tourism. The challenges outlined, such as rising costs and declining profits, are critical factors in ensuring the long-term sustainability of the tourism sector.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

SDG 8: Decent Work and Economic Growth

• Unemployment Rate (Mentioned)

  The article explicitly mentions the expectation that “unemployment and prices continue to rise.” The unemployment rate is a primary indicator for measuring progress towards Target 8.5 (full and productive employment).

• Tourism Sector Economic Performance Metrics (Mentioned)

  The article provides several specific financial metrics that serve as direct indicators of the economic health of the tourism industry, relevant to Target 8.9. These include:

  • RevPAR (Revenue Per Available Room): Forecasted to “decline 0.4% year over year in 2025.”
  • Occupancy Rate: Forecasted at “62.3% occupancy for full-year 2025.”
  • ADR (Average Daily Rate): Outlook held “steady at 0.8% growth for the year.”
  • GOPPAR (Gross Operating Profit Per Available Room): Projected to be “lower… in 2025.”

• Growth Rate of the Tourism Sector (Implied)

  While not stating a GDP growth rate, the article’s entire focus on downgrading the “U.S. hotel growth outlook” implies the use of growth rates as a key measure. The forecasted decline in RevPAR is a proxy indicator for negative growth in a key part of the tourism economy, relevant to Target 8.1.

• Wage and Labor Costs (Implied)

  The article states that “labor costs will be slightly higher in 2025” and are a “top concern.” This serves as an implied indicator related to the “decent work” aspect of Target 8.5, reflecting the financial conditions of employment within the sector.

4. SDGs, Targets, and Indicators Table

Source: hoteldive.com