NASHVILLE, Tennessee — The hotel industry is often cyclical in nature. The past couple of years, however, have been marked by constant volatility in the headlines.
This year has mostly been a positive one following a disappointing 2025, but optics can change rapidly as global headwinds appear out of thin air on a normal cadence.
Allison Frazier, vice president of revenue management at Atlanta-based Peachtree Group, used a familiar phrase to describe her current feelings on the state of the hotel industry.
"I feel cautiously optimistic. It's been a really, very good first half of the year," she said during a revenue management roundtable discussion hosted by CoStar News Hotels at the recent Hotel Data Conference. "I think that it's still volatile. There's still a lot of political things and things with the economy ... that's why I like the word 'cautiously' because I feel like things can change very quickly."
Linda Gulrajani, vice president of revenue strategy and distribution at Milwaukee-based Marcus Hotels & Resorts, said she's also "cautiously optimistic." Marcus Hotels' portfolio skews toward the upper-end of asset types, which is "the sweet spot right now" for hotel demand, she added.
One source of the optimism comes from the strength of group travel.
Lynsey Kreitzer, executive vice president of commercial strategy at New Hampshire-based management company Lark Hotels, said the sweet spot for group travel has been smaller events — those with under 200 people — that bring in a higher dollar amount per person.
Group performance has been one of the key contributors to Peachtree's year-over-year growth and success, Frazier said, also noting how smaller groups are traveling more.
Like a lot of areas of the hospitality industry, it comes with a caveat, though. While group pace has been strong, banquet contribution from those groups has not, Gulrajani said.
"That's been kind of a standout for us this year across most of our hotels, where we're getting the group, but we're just not getting the food-and-beverage spend that we used to get or expected from it," she said. "We really have to think hard about what's our strategy for next year, and that's hugely important to some of our big group hotels."
Much has been made about the so-called "K-shaped economy," referring to high-income earners continuing to grow their wealth while low-income earners make less. This phenomenon has led to a bifurcation in travel demand among asset classes, with luxury and upper-upscale hotels performing well while economy and midscale hotels lag behind.
High-income earners have been prioritizing experiences over material goods in recent years, a trend that Kreitzer believes will continue.
"One thing I don't think is going away, which we've seen since COVID, is that people are trading in possessions for experiences," she said. "I do think people are doing that, and I love that for us because then we can really pour into those high-intent travelers that are like, 'I want to experience X, Y, Z when I'm at that location.'"
More travel demand is obviously a good thing for U.S. hotels, but hoteliers then need to be ready to meet the moment and quench the thirst for those experiences.
"On the flip side, we have to rise to the occasion and provide the experience," Gulrajani said.
There are some key broader economic metrics that the hotel industry has recently broken away from, Gulrajani said. Unemployment numbers and U.S. gross domestic product used to correlate more with hotel demand, but that hasn't been the case in recent years.
"I feel like the world's a little bit of a contradiction right now. There's all these macroeconomic things happening, and the hotel business — at least the higher end — is not following what some of the things would tell you," she said. "I do think things have changed a lot, but that macroeconomic piece still could impact the hotel industry down the road."
World Cup as a case study
There's perhaps no better example that encapsulates the current state of the hotel industry than the 2026 FIFA World Cup.
Back in the fourth quarter of 2025, there was incredible hype surrounding the potential hotel demand the World Cup would bring to the U.S. As the months went by and the tournament drew nearer, that hype fizzled as forward bookings remained absent. The actual result was a positive boost to summer demand, but not at the levels it was once anticipated to be.
This volatility in perception is a microcosm of what the industry at large has been facing over the past few years, as there are constant headlines that can change so much at the drop of a hat.
"Year to date, with World Cup, any kind of special event, but then just in general, that's been our biggest thing and what I've been talking to our staff, our whole commercial team, is we have to be able to pivot," Frazier said. "What we think might happen or what might normally happen, they may not be what we end up seeing when we are watching trends or watching prices, and if you can't recognize that and pivot, then we're going to lose."
Although the World Cup didn't play out as expected with room blocks filling up, hotels were still able to push rates and attract international travel, Kreitzer said.
"You can't plan for an event completely. You've got to have a plan A, sure, but you almost have to have these timelines in mind of, 'OK, we're not seeing what should happen, [let's] pivot quickly.' [You have to be] able to look at the micro details of how that event is coming in so that you can take advantage," she said.