With no clear policy direction from Washington and global tensions rising, major players in the hotel industry are finding it difficult to assess the path forward.

The US hotel sector is experiencing a significant downturn, as fresh data shows a steep drop in summer travel bookings—particularly from Canada—amid rising economic instability.

Experts link the turbulence to a mix of volatile tariff policies and heightened geopolitical tensions, which have collectively eroded confidence in the travel and hospitality markets.

According to industry analysts, advance hotel bookings from Canadian travellers have fallen by over 70% compared to last year.

This sharp decline coincides with a broader drop in consumer sentiment, which is down 23% year-to-date, reflecting wider concerns about the direction of the US economy.

Forecast withheld amid volatile economic signals

Lodging Analytics Research & Consulting (LARC), a key industry advisory firm, has announced it will not publish an updated forecast for the US hotel industry in light of current market conditions.

The decision marks a rare move, prompted by what the firm described as “unprecedented uncertainty” within the economic and political environment.

Moody’s Analytics recently revised its 2025 US GDP forecast from 2.3% to 1.3%, citing instability in trade policy and deteriorating economic indicators. Meanwhile, the S&P 500 index has fallen by 15% so far this year, including a 12% drop since the beginning of April.

These developments are adding pressure to sectors reliant on consumer spending and international travel.

Canadian travel to the us sees steep decline

Relations between the US and Canada have become increasingly strained, with recent policy shifts and rhetoric from Washington contributing to the decline in travel demand. Canadian tourists represent a significant portion of the US hotel market, and the sudden drop in bookings is expected to have a noticeable economic impact during the summer months.

Observers have pointed to recent tariff increases and the lack of clear guidance from the US administration as key contributors to the uncertainty.

The unpredictability surrounding trade negotiations, particularly with major partners like Canada, has made it difficult for businesses to plan for the months ahead.

Wider industry impact expected as sentiment falls

The combination of falling markets, shrinking GDP expectations, and a drop in consumer confidence is likely to affect multiple parts of the travel and hospitality sectors.

Industry figures suggest that, without a clearer policy framework and stabilising economic signals, recovery may be slow and uneven.

For now, firms like LARC are holding off on future projections, underlining the unpredictable nature of the current climate.

The US hotel industry, once buoyed by steady cross-border travel and consumer spending, may now face one of its most challenging periods in recent years.

Navigate the shifting tariff landscape with real-time data and market-leading analysis. Request a free demo for GlobalData’s Strategic Intelligence here.

(source)