Property consultants CBRE have softened their outlook for the US hotel market, as they expect other regions of the global market to continue on a positive trend.
The redrawing of the lines for American hotel prospects came in the group’s H2 Global Hotel Outlook. It warns of “more dramatic changes over the next three quarters”, as tariffs, government shutdowns, and competition from hotel alternatives lean in. Year to July, revpar at US hotels averaged a modest 0.4% growth, as occupancy slipped lower for four months in a row.
US room rates turn softer
The agents warn that they expect room rates to start falling, as hotel managers react to the lower occupancy levels. Based on this, they are now forecasting revpar will contract 0.6% in the second half of 2025. As a result, the full year outturn will be a rise of just 0.1% for the full year – a significant shift from CBRE’s earlier prediction of a 1.8% improvement.
Analysing the reasons for the poor performance of the sector, CBRE notes a modest rise in inbound travellers, while both business travel and meeting and events volumes fell. There has also been a 5.3% increase in the supply of short term rental properties, over the last year. With challenges around operating costs, and labour, they now warn hotel margins will fall in 2025, for the third year in a row.
Other regions are delivering a contrastingly strong performance. Northern Latin America is seeing a growth in tourism, with Mexico enjoying 15.6 million international arrivals in the first four months of the year. In Colombia, the figure was up 6.6% year on year.
With confidence in the future, developers are delivering more hotels. Mexico saw 2,280 new rooms added by May 2025, while the pipeline in Dominican Republic adds up to 78 hotels. Costa Rica, too is enjoying a resurgent hotel space, with an estimated USD700 million being invested in developments.
In Europe, air transport volume is expected to be 5% ahead in 2025, returning to its long term trend after the pandemic. While US visitor numbers are up, volumes from China remain muted. CBRE says revpar across the continent is up 2.8% year to date.
Winners in Middle East, Asia Pacific
In the Middle East, the main markets have all had a strong 2025 so fear. Dubai’s visitor numbers were up 6.1% year on year, during the first half of the year. In Saudi Arabia, destinations such as Makkah and Madinah have seen revpar up, while Jeddah and Riyadh were softer.
Across Asia Pacific, the countries enjoying the best growth are Japan, Vietnam and South Korea. In Japan, hotel room rates were up 17% in the first half, as tourism boomed in response to a weaker local currency. In South Korea, rates were up a respectable 6.3% in the same period.
