U.S. Hotel Forecast Assumptions – June 2026

The first four-plus months of 2026 beat projections, prompting CoStar and Tourism Economics to significantly upgrade the 2026 U.S. RevPAR growth forecast to +2.8%. Year to date through April, U.S. RevPAR growth came in at 4.0%. Additionally, Q1 RevPAR was the highest on record. 
 

The overall outlook remains complex, shaped by persistent macroeconomic uncertainty, a longer-than-expected conflict with Iran, and continued pressure on the current administration from both global and domestic front. We would usually expect such a combination to result in performance headwinds, like what we saw in 2025. However, a mix of strong leisure travel demand, increased business travel recovery, and strengthening event calendars are driving performance forward despite the noise. Solid performance on shoulder days (Sunday and Thursday) also reinforces the strength in general demand recovery. 
 

Segmentation

Since the start of 2026, U.S. hotel demand has increased 2.0% year over year. Transient demand (bookings of less than 10 room nights) began improving during Q4 of last year, but the major difference has been in the improvement in the group segment (bookings of 10 or more room nights). Between February and April, group demand grew 2.7% with gains especially strong in secondary markets that normally host small-to-medium sized events with in-quarter pickup.
 

Chain Scales

Demand growth has also been spread across the chain scales, while growth in average daily rate (ADR) is still heavily concentrated in the upper tier.  Luxury ADR sat just below +6% during the April YTD period, showing continued bifurcation in the economy and less consumer pricing pressure for higher-spend travelers. 
 

Select-service properties, with ADR around +2%, remain under the rate of inflation. This segment was an obvious example of the performance pressures seen in 2025, so improved performance represents the positive shift for several consumer streams. 
 

Lower-end properties have seen mild-to-moderate improvements in demand, but rate weakness continues with a consumer base most impacted by pricing pressures. 
 

Summer and Events

CoStar and Tourism Economics project strong summer performance with some help from the FIFA World Cup. A combination of continued demand strength, calendar offsets, and mid-sized event recovery will sustain a more positive outlook compared with the previous forecast. 
 

The picture for large events is a bit more uncertain. Blue Dot Fever is the talked-about pressure facing the live music industry, but BTS’ ARIRANG World Tour is expected to be an impactful draw as it sells out multi-night stadium shows. 
 

America 250 events are expected to be a benefit as well but will be more localized and dependent on host location. 
 

Development Pipeline

Supply expectations have been pulled back for 2026 by 30 basis points, from +0.7% to +0.4%, and 2027 was lowered 10 basis points. The supply pipeline has a near record level of rooms (767k), but only 19% of those rooms are In Construction, which is the lowest number in that phase in 12 years. The uncertain macroeconomic climate, as well as prolonged inflationary pressures and increased business costs have both near-term and lagging impacts on supply development. These influences are elevated by an increasing likelihood of central bank rate increases in the second half of the year.

World Cup

Less than two weeks away from kick off, expectations for the World Cup are moderately optimistic with an undertone of uncertainty. There are several markets, such as Dallas, Los Angeles, and San Francisco, where occupancy on the books is outpacing last year handily, but that interest and expected premium depend on match location, type, and participating teams. From past World Cups, along with similar international-draw events, we expect this event to provide an ADR-driven event impact with boosts heavily scaled toward the upper-end scales.
 

Current forward-looking data, alongside recent client discussions, indicate that a handful of the European heavyweights such as Portugal, Germany, and England are shaping up to be strong crowd draws. International transient will be strong due to the event’s nature, but there are still headwind pressures from geopolitical posturing and ongoing conflicts such as the current Iran situation. 
 

Inbound/Outbound

We expect international inbound travel to the United States to increase 3.4% for 2026, which is a pullback of 30 basis points from the February forecast release. Year to date, we have seen some rebound from the lows of last year, but headwind persist from U.S. international posturing. Improvement has been focused from Europe and Latin America, but weakness continues from Canda and Asia Pacific countries. Tourism Economics projects 1.1% of growth to be attributed to the World Cup lift. Expectations for 2027 inbound are to increase to +5.1%. 
 

U.S. outbound travel for 2026 has been downgraded from +4.6% to +3.8% with more travelers remaining stateside. This will contribute to the increased domestic demand for middle and upper-end properties and is part of the reason behind strong YTD performance in resort markets. Outbound is expected to rise to +4.9% in 2027.