Several high-profile reports this month confirmed one conclusion: The United States economy is slowing down.
Dramatic revisions to payroll data showed employment growth has been largely flat over the past three months; but did they include the job loss caused by deportations? Did the Federal Reserve’s lack of movement on reducing interest rates until now hurt the market? How about Americans traveling to Europe, the reduction of government spending on travel, the improved performance of short-term rentals and cruises and the unease caused by tariffs and geopolitical tension?
Let’s take a different look:
Through June, RevPAR moved up by 0.8% despite the inconsistent application of tariffs that created uncertainty for all travelers and all of the above captioned factors such as interest rates, reduced government travel due to DOGE, a tougher approach to the border (understatement) and aggressive marketing by short-term rentals.
Luxury properties saw RevPAR grow 3.3%, while economy hotels experienced a 1.2% decline. Leisure travel strength continues with strong demand for luxury accommodations. Business and government-related travel is currently sluggish, but all things considered—tariffs, interest rates, geopolitical challenges and the different approach in the White House, let’s not overreact.
Below is a voice of reason from STR, Tourism Economics and MMGY:
“Unrelenting uncertainty and inflation, coupled with tough calendar comps and changing travel patterns, have caused lower demand,” said Amanda Hite, STR president.
“Additionally, as the year has unfolded, we’ve seen rate growth converge closer with demand. We expect little change in the economic outlook over the next 18 months, but we are optimistic that once trade talks have concluded and the impact of the budget reconciliation bill comes to fruition, hotel performance will recover.”
“The slowing U.S. economy should absorb the effects of tariffs without tipping into a recession,” said Aran Ryan, director of industry studies at Tourism Economics.
“The current environment—characterized by slowing consumer spending, reduced business capital spending, and declining international visitation—will transition to one boosted moderately by tax cuts and less policy uncertainty as we look to 2026.”
New research from MMGY reveals that American travelers remain deeply committed to leisure travel, even as economic headwinds and global uncertainty shape their choices.
According to the 2025 “Summer Edition” of Portrait of American Travelers®, U.S. travelers are increasingly hitting the road, turning to artificial intelligence for planning support and embracing evolving definitions of luxury, lifestyle and wellness.
Sneak Peak at 2026 Lodging Industry Trends
What are some key trends this year?
42% of leisure travelers now utilize AI-powered tools such as ChatGPT to plan their trips – a 14% increase year over year. It’ll be over 50% next year.
Gen Zers and Millennials are driving this and another trend–Cannabis Tourism. 39% of travelers are interested in cannabis-related travel, and that will obviously benefit states where cannabis is legal.
We will be coming out with our Annual Top 10 Trends in Hospitality for 2026 next week. No, Cannabis Tourism is not one of them, most of the trends are technology trends like facial recognition, Cloud-based PMS and chatbots. Tune in!
Robert Rauch, CHA, has been an owner-operator of hotels for several decades and is founding chairman of Brick Hospitality and owner of R. A. Rauch & Associates, Inc. He sits on the Leadership Council of Arizona State University where he has taught Hospitality Entrepreneurship for 12 years and is Founding Sponsor of Women in Tourism & Hospitality (WITH) in San Diego.
www.hotelguru.com
