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STR/Tourism Economics Sees Stabilization in U.S. Hotel RevPAR in 2026 – Image Credit Unsplash+
The first STR/Tourism Economics forecast of 2026 projects full-year RevPAR growth of 0.6%, a 10‑basis‑point upward revision from the November 2025 revision. The improved projection follows a turbulent 2025, when RevPAR fell 0.3%—marking the first non‑recessionary RevPAR decline ever recorded in the U.S. hotel industry.
The same headwind pressures of broad economic uncertainty, geopolitical instability, government cutbacks, and rising domestic tensions exist as we move through the early portion of 2026. There are signs in the short term that demand declines are easing in the middle and upper-tier segments, but select-service and economy hotels are still facing downward pressure on ADR. As a result, RevPAR in those segments remains flat to slightly negative.
Calendar comps
U.S. demand dipped 0.5% in 2025 but is expected to rebound conservatively at +0.4%. Our ADR growth projection was also increased 10 basis points from +0.9% to +1.0%. Demand declines in Q4 2025 were primarily driven by the expected reversion in markets that saw elevated displacement bookings after Hurricane Milton and Helene in 2024. Outside of those 13 markets, RevPAR for the U.S. grew in the fourth quarter. More demand improvement is projected for the second half of 2026 as natural disaster offsets continue to fall off the calendar.
Overall, we expect 2026 U.S. hotel performance to trend like 2025, as there is no clear catalyst for inflection. However, upside potential does exist, namely through calendar composition—2026 has a better calendar composition and holiday placement relative to 2025. Also, the FIFA World Cup is forecasted to boost U.S. RevPAR in June and July. Host markets will obviously see a greater impact. Read more on the World Cup in a later section.
Quarterly changes
Q1 2026 RevPAR was upgraded from the November forecast, though we still expect the metric to decline modestly (-0.2%). The revision was driven by upgrades to our ADR forecast for upper-end scales. Consumer bifurcation remains firmly in place, with RevPAR growth skewed toward the top-end scales for the first half of the year then similar improvement for the middle segments moving into Q3.
Group business
Group performance was mixed in 2025, as demand fell 1.8% but was offset by 4.0% ADR growth. Summer represented the low point for groups, with some rebound in Q4 2025. Client conversations indicate that shortened booking windows remain in the group segment, and most of this is expected in the second half of this year. Group rates are expected to moderate slightly compared to 2025 but remain solidly positive.
Supply
Supply expectations have been pulled back 20 basis points for 2026, from +0.9% to +0.7%. The pipeline includes a near record level of rooms (767k), but only 19% of those rooms are under construction. Even if interest rates continue to fall, and financing becomes more easily accessible this year, the lag between investment, construction, and opening means that more constrained supply growth will be the norm for the upcoming years. With new development limited, conversion activity in 2025 was the highest since 2016, with nearly 1,900 hotels converting in the year.
International demand
In 2026, we expect international inbound travel to the United States to rebound 3.7%, but levels will remain below 2019 comparables. Our partners at Tourism Economics expect 1.1% of that growth to be attributed to World Cup lift. U.S. outbound travel will likewise continue to rise, growing 4.6% in 2026 after coming in 4.7% for 2025.
World Cup
The 2026 World Cup, played across the U.S., Canada, and Mexico, is currently forecasted to contribute a full-year 0.4% RevPAR lift for the U.S. in 2026. Mentioned in the November assumptions release, STR conducted a thorough analysis of past major international event performance and considered multiple conditions, such as the number of matches played per market, match pairings, and stages of gameplay when forecasting individual markets. Lift will be primarily focused on the rate side, especially with more advanced matches, but markets should see a positive boost to demand, even with mild-to-moderate transient occupancy displacement.
In early December, the team pairings and match locations were announced. From past event analysis and attendance performance, STR expects select teams to contribute more significantly to hotel performance during and around the match dates. A few of the expected standouts from Europe are France, Scotland, and Portugal. From Latin America, Ecuador, Brazil, and Argentina should be larger demand generators.
STR is continuing to track potential risks both internally and communicated to by clients related to the World Cup. These challenges include price sensitivity for domestic travelers, expanded U.S. immigration enforcement, and heightened geopolitical posturing that has raised concerns of international inbound effects.
Long-Term Outlook
The RevPAR forecast for 2027 was reduced slightly to +1.4% for 2027 and +2.0% for 2028. ADR will remain the primary RevPAR growth driver, although rate growth is expected to remain below the rate of inflation.
This article originally appeared on CoStar.
