Global Hotel Market Forecast Assumptions – February 2026

STR and Tourism Economics currently produce forecasts for 59 markets across Europe, the Middle East, Africa and Asia Pacific region. The analysis below summarizes the latest forecast revisions. 

Europe short-term outlook: 

For STR’s 31 European forecast markets, short- and medium-term RevPAR projections have been modestly rebalanced. We now forecast 1.1% RevPAR growth for 2026, which is an upgrade from the +0.4% forecasted in November 2025. Consequently, RevPAR growth in 2027 has been downgraded from +1.3% to +0.6%. Adjustments to ADR, as events are announced, and later offsets are the biggest factors underpinning the change to RevPAR expectations. 
 

Limited number of markets drive aggregate forecast changes

While the 2026 headline projections have improved from November expectations, the gains are concentrated in a limited set of markets. 

The 2026 Milano-Cortina Winter Olympics had a significantly stronger impact on rates than initially expected, lifting Q1 2026 RevPAR nearly EUR21. As of our last forecast, February 2026 ADR was expected to reach EUR300 and rise nearly 50% year over year. The reality has gone quite a bit further, with ADR over the Opening Ceremony reaching EUR552. Daily levels over the 17-day event averaged nearly EUR500 per night, prompting upgrades to the Q1 2026 projection.

Paris’ Luxury & Upper Upscale classes received the second-largest RevPAR upgrade of all European market segments, with both occupancy and ADR improved in Q1 2026 ahead of additional ADR upgrades in Q2-Q3 2026. Pre-Ramadan travel from the Middle East, along with displaced demand from Milan, helped lift the first quarter of the year. Upgrades to ADR have been pushed through Q3 2026 as consumers continue to prioritize travel spend, and the likelihood of a luxury travel slowdown is increasingly unlikely.
 

Rate the driver to RevPAR growth in 2026

While just 12 of 31 European forecast markets reported greater ADR growth than occupancy growth in 2025, that trend is expected to revert in 2026. Twenty markets anticipate stronger ADR growth than occupancy this year, as is more ‘normal’ in Europe.

Occupancy is still rising across the continent, with just 11 forecast markets expecting year-over-year declines. Slower occupancy growth is common, however, due to both supply growth and baseline occupancy levels.

Nineteen markets expect supply growth higher than the long-term European average of +0.9%, and 15 markets expect more than 2% supply growth this year. The five markets with the highest supply growth—Belfast, Lisbon, Edinburgh, Dublin, and Stuttgart—all expect more than 4% supply growth this year. Unsurprisingly, all five markets also expect occupancy declines. Higher supply growth is a limiting factor in occupancy growth, as travelers are faced with more choice in their stays, and hotels contend with increased competition.

Occupancy levels play an important role in slower occupancy growth as well, as shown by the UK airport submarkets. Gatwick Airport and Heathrow Airport reported the highest occupancy among all European forecast submarkets in 2025, at 85.4% and 84.4%, respectively. Each anticipates less than 1% occupancy growth in 2026. The higher the occupancy level, the harder occupancy growth becomes, as so many rooms are already filled on a regular basis. 
 

New events on the horizon

In addition to biennial and triennial trade fairs (Düsseldorf, Frankfurt Centre), biennial air shows (Paris, London), and sporting events (Budapest, Paris, Madrid), concerts will play a major role in 2026 ADR growth. Several global superstars announced tours over the past quarter. BTS, Bruno Mars, Bad Bunny, and Harry Styles will headline shows across Europe. 

The Harry Styles “Together, Together” tour is notable in its residency-style setup. Styles will spend 10 nights in Amsterdam and 12 nights in London, his only European tour dates. With the tour concentrated in two markets, both should benefit from short-, medium-, and long-haul travel. 
 

Asia Pacific short-term outlook:

STR’s 16 Asia Pacific forecast markets are forecasted to increase RevPAR 3.6% in 2026 and 2.5% in 2027—a short-term improvement driven by ADR (+2.4%). ADR this year has been upgraded for 11 of 16 Asia Pacific forecast markets, and 15 of 16 markets expect both rate and RevPAR to rise year over year. 
 

Muted supply growth supports RevPAR growth

Supply growth across Asia Pacific forecast markets remains modest, with just four markets (Melbourne, Bangkok, Mumbai, and Auckland) expecting 2026 growth higher than 2%. For three of those four markets, 2026 represents the last of a supply boom phase, with growth expected to decelerate sharply from 2027.

The 2026–27 supply slowdown stems from market maturity, as Asia Pacific markets have significantly matured over the past decade. For forecast markets, the compound annual supply growth rate from 2016-26 is +3.5%, with individual market CAGR ranging from +1.1% (Sanya) to +6.2% (Chengdu). Twelve of 16 markets averaged annual supply growth of 2%+ over the past decade.

With these markets so well supplied, an increasing number of rooms is necessary to push supply growth figures. Nearly 22,000 rooms are expected to open across the 16 markets, but that averages out to just 1.1% growth relative to 2025.

Development trends impact short- and long-term market supply forecasts as well. Emerging markets like Pakistan, Bangladesh, Vietnam, and Fiji have sizeable pipelines as a share of existing rooms. With developer interest shifting to new markets in the region, supply growth among the bigger, more mature forecast markets may remain slower in the long term.

Mainland China still the market to watch

A flurry of flight cancellations from China to Japan over Q1 2026 dampened expectations for inbound Chinese travel to Tokyo this year, and occupancy has been downgraded through the first half of the year, with year-over-year declines in January, February, and April as the Lunar New Year is expected to have less impact than normal. 

At the same time, tensions between Japan and China are likely to make other short-haul destinations, like Bangkok, Singapore, Hong Kong, and Auckland more attractive to Chinese travelers. Bangkok demand has been upgraded through the year as inbound travel from China slowly returns.

Forecast expectations within China remain anchored, with the expectation for slow, steady RevPAR growth this year. A strong end to 2025 and preliminary figures from the Lunar New Year holiday, which started 16 February, provide cautious optimism for improved corporate and leisure travel in 2026.

New supply will remain a headwind in Chengdu and Shanghai, with modest occupancy growth expected. While growth numbers are modest, market size understates that figure. Chengdu has more than 150,000 rooms and Shanghai over 380,000, with thousands more rooms expected to open this year.

Middle East short-term outlook:

Our four Middle East forecast markets continue to outperform expectations, despite a challenging development pipeline. RevPAR in Abu Dhabi, Dubai, Jeddah, and Riyadh is now expected to rise an average of 4.2% in 2026, a substantial upgrade from the +1.5% forecasted in November. Expectations for 2027 remain more anchored at +1.9%.

Pipeline adjustments influence all markets

Continued changes in the pipeline have reduced supply growth expectations across all markets. In addition to development dynamics, pipeline changes are influenced by updates to the CoStar database, which includes a recent cleanup of projects with little-to-no movement in recent years. The slower supply growth in all four markets has prompted widespread RevPAR upgrades, though Saudi Arabia market RevPAR will still decline relative to 2025. 

Changing ADR trends in the UAE

Dubai and Abu Dhabi are expected to enjoy another year of strong RevPAR growth driven by 4% ADR growth in Dubai and a 4.4% rise in Abu Dhabi. The exceptional rate growth reported in Abu Dhabi over the past few years has led to a change in longer-term rate variance between the two markets. While in the past, Dubai enjoyed a 25-30% premium over Abu Dhabi in ADR, that gap has closed. In 2026, Dubai ADR will run just 1.5% higher than Abu Dhabi, and beginning with 2027, the UAE’s capital will sell rooms at a higher rate than the country’s biggest market.

The reversal in trend comes largely from summer ADR, as family friendly attractions and events help bring budget-conscious holiday demand into Abu Dhabi.

Long-term outlook: Long-term demand is expected to rise annually across all markets from 2028-30, and most markets can expect RevPAR growth across those three years as well. High supply growth in Milan, Riyadh, Jeddah, and Mumbai will lead to modest RevPAR declines in 2028. Cologne RevPAR will decline the same year due to biennial and triennial trade fair offsets from 2027.

A trickier year for Middle East markets will be 2030. The year marks the conclusion of Saudi Arabia’s ambitious Vision 2030 plan, as well as the start of Expo 2030 Riyadh, two major events that should generate significant demand growth. However, two Ramadan holidays will also be observed in 2030. Ramadan 2030 is expected to be held from early January through early February. Because the Holy Month, which is based on the lunar calendar, shifts back roughly two weeks each year, Ramadan 2031 will begin in December 2030. With both Holy Months falling during the Middle East’s high season, Abu Dhabi and Dubai hotels can expect annual RevPAR declines. The events hosted in Saudi Arabia are forecasted to lead year-over-year RevPAR gains in Riyadh and Jeddah. The forecast team will continue to monitor this closely and adjust the forecasts as appropriate.