February was a good month for San Diego hotels, ADR hit $205, occupancy climbed to 76%+, and RevPAR jumped 27% from January, if you only looked at February, you’d think the market’s firing on all cylinders.

But zoom out to the trailing twelve months, and the picture changes. ADR is down 3.9% to $193. Occupancy dropped 2.5 points to 72.5%. RevPAR fell 6.5% to $140. One strong month doesn’t erase a year of softening demand and eroding pricing power.

Here’s what San Diego operators need to know about the market’s actual standing and what to do about it.

The Numbers: What Actually Happened in February 2026

February 2026 Month-Over-Month Performance (Strong)

• ADR: $205.07 (+5.9% vs February 2025, +13.5% vs January 2026)
• RevPAR: $157.57 (+8.1% vs February 2025, +27.0% vs January 2026)
• Occupancy: 76.8% (+2.1 pts vs February 2025, +8.1 pts vs January 2026)
• COPE %: 93.1% (stable, indicating consistent booking cost efficiency)

*Note: COPE is defined as the contribution to profits or the money left after channel/commission costs

But the Trailing Twelve-Month Average Tells a Different Story

• Feb ’26 TTM ADR: $192.93 (-3.9% vs Feb ’25 TTM of $200.78)
• Feb ’26 TTM RevPAR: $139.95 (-6.5% vs Feb ’25 TTM of $150.75)
• Feb ’26 TTM Occupancy: 72.5% (-2.5 pts vs Feb ’25 TTM of 75.1%)

*Data provided by Kalibri Labs 
 
The Big Takeaways

February Was Strong, But Don’t Mistake It for a Trend
February 2026 delivered solid gains across the board, but it’s also a seasonal high point in a market that has been declining for 12 months. The trailing twelve-month numbers show ADR down nearly 4%, occupancy down 2.5 points, and RevPAR down 6.5%. 

Pricing Power Is Eroding
A $7 drop in ADR over twelve months might not sound dramatic, but for a 200-room hotel, that’s hundreds of thousands in lost revenue annually. The market is telling you that $200+ ADR isn’t sustainable right now. The new baseline is closer to $190, and if you’re not adjusting your cost structure to match, your margins are compressing.

Occupancy Decline Hits Harder Than You Think
A 2.5-point drop in occupancy translates to roughly 1,825 fewer room nights per year for a 200-room property. At $193 ADR, that’s approximately $352,000 in lost revenue. Fixed costs don’t flex down with occupancy, so every point you lose goes straight to your bottom line.

COPE % Is Holding (For Now)
The good news? COPE % held steady at 93.1% in February. That means you’re not bleeding margin to OTAs and distribution costs yet. But if ADR keeps falling and you don’t shift your channel mix, that stability won’t last.

What This Means for Operators

Don’t Chase Occupancy with Discounting
When occupancy softens, the instinct is to drop rates to fill rooms. Don’t. Lowering ADR to chase occupancy destroys RevPAR and trains guests to expect discounts. Focus on high-value segments like corporate, consortia, and groups that drive both rate and occupancy.

Stress-Test Your P&L at $190 ADR
If your budget assumes $200+ ADR and 75% occupancy, you’re planning for a market that might no longer exist. Model your P&L at $190 ADR and 72% occupancy. Identify which costs can flex down (labor, utilities, amenities) and which are fixed. Then adjust before the market forces you to.

Protect Your COPE % by Shifting Distribution Mix
OTA commissions at 15-20% are a luxury you can’t afford when ADR is falling. Push direct bookings harder through Brand.com, Property Direct, and Voice channels, and reduce reliance on high-commission channels unless they’re driving incremental demand. Every point of COPE % you lose makes the ADR decline hurt more.

Rate Management Is the Lever You Control

You can’t control market demand, but you can control how you price and position your property. Dynamic pricing, value-added packages, strategic upselling, and direct booking incentives all help you protect ADR without sacrificing occupancy.

If you’re looking for tactical strategies to increase ADR in Southern California’s competitive market, this guide on boosting ADR without losing occupancy walks through practical approaches that work in our region, from dynamic pricing to upselling to direct booking optimization.

The smartest operators right now are celebrating February’s wins, preparing for a $190 ADR baseline, protecting COPE % by optimizing their distribution mix, and stress-testing their P&L for lower-occupancy and rate scenarios.

If February turns out to be the start of a recovery, great. Just don’t bank on it. While I continue to believe the market will be fine in 2026, the data from the past 12 months doesn’t support it! This is not a recession scare, just a reminder that February is a very small sample of a return to ADR growth.

Proceed with caution, and if the war ends soon and the stars align, we might see that 2%+ RevPAR growth I forecast. I based my forecast on corporate travel returning, inflation easing, and strong AI growth. 

Robert Rauch is a hotel owner and operator with decades of experience in the hospitality industry. His properties in San Marcos and San Diego, California have been early adopters of robotics technology, integrating Relay Robotics delivery robots across multiple locations.