Oxford Economics recently released an analysis titled, U.S. Travel Outlook: 2025 and Beyond, and found that modest average hotel rate hikes of only about 1% can be expected. Additional findings are RevPAR for hotels will finish this year is down by 0.1%, luxury and upper-upscale hotels were enjoying higher room rates, and group and business hotel demand has still not fully recovered from prepandemic levels.
Group accommodations will probably cost more next year, but how much more? The good news, according to Oxford Economics, which recently released an analysis titled U.S. Travel Outlook: 2025 and Beyond, is that modest average hotel rate hikes of only about 1% can be expected.
This year, hotel price recovery lost steam but “remains positive,” with an overall price increase forecasted at 0.8%.
RevPAR (Revenue per available room) for hotels will finish this year slightly down—by 0.1%, according to the report. In 2026, it is estimated to increase by 0.8%.
Yet those numbers are nuanced. Through August, luxury and upper-upscale hotels were enjoying higher room rates—at 2.4% and 0.4% respectively. Yet lower-tier properties were all down: economy (-3.2%), mid-scale (-1.2%) and upper mid-scale (-0.6%). Next year may follow a similar pattern.
Group and business hotel demand has still not fully recovered from prepandemic levels, and is down 2.5% through August (almost 8% in upper-tier hotels), driven in part by an 8.2% drop in international attendees. Canadian visitors to the U.S. have fallen by more than 20%, while increasing elsewhere in the world.
‘Tempered Optimism’
Hotel brands, the report says, are expressing “tempered optimism” about group travel. A recent statement from a Marriott International executive, for example, was cited: “[Our group clients are saying]…I need to be with my customers. I need to be with my colleagues…and group meetings are a powerful vehicle to try and achieve that.”
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The report also noted that although hotel demand in 2025 has been slightly down, short-term rental and cruise cabin nights are up, continuing a trend toward alternative accommodations for travel. It also asked more than 4,000 survey respondents whether they planned trips to support physical, mental or spiritual well-being. Among Gen Z respondents, nearly half (49.2%) said they “often” or “always” did so. Millennials were next, at 48.9%, followed by Gen X at 42.6%. Respondents who were baby boomers (and older) trailed, at only 35%.
The report concluded by predicting that the economy is “very likely to strengthen” in 2026 and 2027.
