2025: On paper, the hotel industry looks alive, RevPAR is creeping up, reports show growth but walk a lobby or talk to a GM, and the truth hits: this is not a rebound, it is a reset.
Growth That Feels Like Treading Water
We are squeezing out RevPAR gains, mostly on rate. Occupancy? Flat. Luxury and upper‑upscale are carrying the weight while midscale and economy are gasping.
Guests are moving differently. They are booking late, staying shorter, and picking their spots carefully. Compression nights, the magic that used to save months, are rare. Rate‑driven growth feels good in a spreadsheet, but it is a sugar high if demand does not follow.
Corporate Travel: Still a Ghost
Tuesday and Wednesday used to be gold. Now, they are tarnished. Corporate transient demand is still 15–20% below 2019. Group business is trickling back, but it is mostly weddings, off-sites, and small meetings. Big conventions and fat corporate programs? Still inconsistent.
Operators leaning on ADR alone are playing defense. Without loyalty and real experience, that rate wall will crack.
STRs Are Winning the Personality Contest
Short‑term rentals are not just competing; they are teaching. They offer story, local flavor, and flexibility. A well‑staged Airbnb feels like a memory in the making. Meanwhile, too many hotels are still selling points and predictability.
If we do not build relevance and character back into our spaces, guests will keep drifting toward experiences that feel personal and alive.
Macro and Labor Reality Check
- GDP: 1.3% for 2025, a soft landing at best.
- Rates: 10‑year around 4.35%, capital is cautious and expensive.
- Labor: Participation 62.4%, wages rising, union activity heating up.
We are paying more to do the same work with fewer hands. Midscale and economy feel this pain most. Service suffers, and guests can feel it.
Rising Costs and Tariffs Are Squeezing NOI
Furniture costs more. Minibars cost more. Imported wine, tech, and bar gear? More. PIPs are delayed, phased, or value‑engineered to survive another year. Luxury can mask it with rate and vibe; midscale and economy are getting hit straight in the margins.
Capital Markets: Slow and Selective
Deals are crawling. Bid‑ask spreads are stubborn. CMBS is trickling back, but with smaller checks. Lenders prefer workouts to foreclosures. Extend and pretend is still the play.
High capex, sticky labor, and macro fog keep buyers cautious and sellers nostalgic for 2019 pricing.
Development: The Brakes Are On
- Pipeline: 6,280 projects / 737,000 rooms, up a tick, but actual starts slowing.
- Under Construction: 1,120 projects / 138,776 rooms, many delayed or phased.
- Planning: Developers are deferring or downsizing. Financing costs, tariffs, and union rules are squeezing feasibility.
Urban projects increasingly need condos or creative financing to pencil. Deferred maintenance is already showing up in guest experience and valuations.
Segments and Guests in 2025
- Luxury / Upper‑Upscale: Still winning with leisure, exclusivity, and rate resilience.
- Premium Full‑Service: Holding rate but bleeding on weak weekdays.
- Midscale / Economy: Exposed and struggling, price‑sensitive guests, STR pressure, and shrinking margins.
Traveler behavior:
- Leisure weekends hold, but shorter and thriftier.
- Social and small group business is slowly filling gaps.
- Corporate transient is still a shadow of its old self.
Geography Reality
- Performing: South Florida, Scottsdale, Sedona, Charleston, where leisure still loves us.
- Struggling: San Francisco, Portland, Chicago Loop, soft corporate, thin international, image problems.
Even top markets see shoulder‑night weakness. Secondary urban markets are just surviving weekdays.
2025 Outlook: A Low‑Gear Year
RevPAR will likely grow 1–2%, almost all from rate. Occupancy might crawl forward if corporate or international picks up, but it is no guarantee.
Risks: Tariffs, labor pressure, weak inbound travel, stubborn financing, and guest drift to STRs. Keep ignoring them, and 2026 will bite.
My Playbook for Operators
- Stop chasing spreadsheets. Start chasing relevance.
- Make your F&B and local programming irresistible to guests and neighbors alike.
- Catch last‑minute and bleisure demand with frictionless booking and clear value.
- Audit every cost line. Tariffs and utilities will not wait for your budget.
- Borrow Short Term Rentals tactics: agility, local story, human touch.
- Take care of your teams. Burnout is visible to every guest.
- Align CapEx with reality. Deferred maintenance is deferred reputation.
Have your People call my People.
-Longing for Beloning™
Bashar Walli - www.ThisAssembly.com
