STR/Tourism Economics Forecast Shows Uneven 2026 Hotel Growth Across Major Global Markets

The latest hotel market forecasts for 2026 from STR and Tourism Economics indicate varied trends across Europe, Asia Pacific, and the Middle East, with event-driven rate increases, supply growth, and shifting travel patterns influencing revenue and occupancy projections in each region.

STR and Tourism Economics have released updated forecasts for 59 hotel markets across Europe, the Middle East, Africa, and Asia Pacific. The analysis covers changes in revenue per available room (RevPAR), average daily rate (ADR), and occupancy projections for 2026 and 2027, highlighting the influence of major events, supply growth, and shifting travel demand.

Europe: Event-Driven Rate Growth and Supply Challenges

In Europe, forecasts for 31 markets show modest upgrades in RevPAR growth for 2026, now at 1.1% compared to 0.4% previously projected. However, the 2027 outlook has been revised downward to 0.6%. The adjustments stem mainly from changes in ADR expectations due to major events and subsequent offsets.

The most significant impact comes from the 2026 Milano-Cortina Winter Olympics, which led to higher-than-expected rates in Milan. During the event, ADR reached EUR552 on the Opening Ceremony night, with a 17-day average of nearly EUR500 per night, prompting a notable upgrade in Q1 2026 projections.

Paris also saw upgrades, particularly in the Luxury and Upper Upscale segments, due to improved occupancy and ADR ahead of further expected increases in Q2 and Q3. Pre-Ramadan travel from the Middle East and displaced demand from Milan contributed to these gains.

Despite these upgrades, the improvements are concentrated in a limited number of markets. In 2026, ADR growth is expected to outpace occupancy growth in 20 of 31 markets, a return to typical European trends. However, 11 markets anticipate year-over-year occupancy declines, often linked to higher supply growth or already high occupancy levels. Five markets—Belfast, Lisbon, Edinburgh, Dublin, and Stuttgart—expect supply growth above 4%, leading to projected occupancy declines amid increased competition.

Major Events and Their Impact

Beyond sporting events, concerts and trade fairs are expected to drive ADR growth in 2026. High-profile music tours by artists such as BTS, Bruno Mars, Bad Bunny, and Harry Styles are anticipated to boost demand, particularly in cities hosting multiple shows. Harry Styles’ residency-style tour in Amsterdam and London is expected to benefit both markets due to concentrated travel demand.

Asia Pacific: Muted Supply Growth and Steady Demand

The Asia Pacific region’s 16 forecast markets are projected to see RevPAR growth of 3.6% in 2026 and 2.5% in 2027, primarily driven by increases in ADR. Eleven markets have received ADR upgrades for 2026, and 15 expect both rate and RevPAR to rise year over year.

Supply growth in the region is generally modest, with only four markets—Melbourne, Bangkok, Mumbai, and Auckland—anticipating supply growth above 2% in 2026. For most, this marks the end of a supply boom, with growth expected to slow from 2027 onward. Over the past decade, the compound annual supply growth rate across these markets was 3.5%, but future growth is expected to moderate as markets mature.

Emerging markets such as Pakistan, Bangladesh, Vietnam, and Fiji have larger development pipelines relative to existing supply, suggesting future growth may shift towards these regions.

Mainland China and Regional Travel Patterns

Within Asia Pacific, China remains a key market to watch. A series of flight cancellations from China to Japan in early 2026 led to downgraded occupancy forecasts for Tokyo, with expected year-over-year declines in the first half of the year. Tensions between Japan and China may redirect Chinese travelers to other destinations such as Bangkok, Singapore, Hong Kong, and Auckland, supporting demand in those markets.

In China, RevPAR growth is expected to be slow but steady, with preliminary Lunar New Year holiday data indicating cautious optimism for both corporate and leisure travel in 2026. New supply in cities like Chengdu and Shanghai will limit occupancy growth, though the absolute number of rooms remains high.

Middle East: Upgraded RevPAR Amid Slower Supply Growth

The four Middle East markets—Abu Dhabi, Dubai, Jeddah, and Riyadh—are projected to see average RevPAR growth of 4.2% in 2026, a significant upgrade from the previous forecast of 1.5%. The improvement is attributed to slower supply growth, following adjustments to development pipelines and database updates that removed inactive projects.

Dubai and Abu Dhabi are expected to experience strong ADR growth, with the ADR gap between the two cities narrowing. By 2027, Abu Dhabi is forecasted to surpass Dubai in ADR, largely due to summer rate increases driven by family-oriented attractions and events.

Long-Term Outlook and Key Risks

From 2028 to 2030, demand is projected to rise annually across most markets, with corresponding RevPAR growth. However, high supply growth in cities such as Milan, Riyadh, Jeddah, and Mumbai is expected to result in modest declines in RevPAR in 2028. The year 2030 presents unique challenges for Middle East markets, with the conclusion of Saudi Arabia’s Vision 2030, the start of Expo 2030 Riyadh, and the occurrence of two Ramadan holidays during the high season. These factors are expected to lead to declines in RevPAR in Abu Dhabi and Dubai, while Riyadh and Jeddah may see gains due to event-driven demand.

Conclusion

The 2026 hotel market outlook shows a complex mix of event-driven rate increases, supply growth impacts, and shifting travel patterns across regions. While Europe and the Middle East will benefit from major events and slower supply growth, Asia Pacific’s mature markets face moderated expansion, with emerging markets poised for future development. Ongoing monitoring and forecast adjustments are expected as market conditions evolve.

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