A Superior room with view at Dusit Le Palais Tu Hoa Hanoi
GiveUs the Skinny
Dusit Le Palais Tu Hoa Hanoi was an instant hit when it opened in May, attracting an endless stream of curious locals and selfie-snapping social-media darlings who were drawn in by the sweeping spiral staircase and soaring atrium that bathes the hotel in flattering light all day long. Thai hotel group Dusit International picked this property (along with two others in Doha and Chengdu) to launch their Dusit Hotel brand, which designates properties that have a specific cultural connection to the destinations that they serve. I was thrilled to be the first media guest to experience the new brand in Vietnam.
The Vibe
Much of the design of the hotel is a nod to the 12th-century Ly Dynasty princess Tu Hoa, remembered for her generosity and selflessness. Legend has it that she mastered silk weaving, as well as cultivating mulberry trees needed to feed the silkworms, in order to provide a livelihood for her people. The ceramic murals behind reception, objects related to weaving, and many of the 300 original art pieces by some of Vietnam’s best-known contemporary artists and curated by Van Vi of the Van Gallery and The Muse Artspace, are all reminders of the princess’s enduring legacy.
The hotel entrance
Silk-inspired decor in reception
The Lobby Lounge
The Location
West Lake, also known as Ho Tay Hanoi, has always been a welcome haven away from the congested streets of the Old Quarter of the city, but the neighborhood is currently having something of a moment. The area is packed with historic edifices, including the 18th-century Kim Lien Temple, built on the site of the palace of the princess who gave Dusit Le Palais Tu Hoa Hanoi its name. But the neighborhood is not just for sightseeing. It has also attracted the likes of the cutting-edge cocktail bar Workshop14, farm-to-table Michelin green-star restaurant Lamai Gardens, and the recently opened Lotte West Lake Mall. This is also where you’ll find foodie hotspots like Pho Bo Ho Loi, now the locals’ worst-kept-secret beef-noodle joint. Gatekeeping that one was no match for the power of online word-of-mouth.
The Crowd
In a city that hasn’t seen a new luxury hotel in a hot minute, the Dusit Le Palais Tu Hoa Hanoi is clearly the hospitality sweetheart of the moment. It’s a little too soon to know if it will last, but the hotel has potential not just as the most desirable place to stay in this part of town, but as a buzzy social destination for locals and visitors alike.
The Rooms
Silk headboards, painted silk, and silk-weaving shuttles continue the theme throughout the 207 rooms. Superior and deluxe rooms are bright and comfortable, while junior suites and one-bedroom suites include spacious sitting areas, dressing rooms, and even tastefully designed kitchen areas. Many rooms have sleek bathtubs, balconies or both. The style throughout is understated, with natural stone, wood accents and the odd equestrian touch like stirrups and bridles.
One-Bedroom Suite with view
Suite with a bathtub
The Food and Drink
Palais Lounge, the hotel’s stylish lobby bar, is busy throughout the day and has already hosted high-profile guest shifts with international spirit sponsors. Attention will only grow with the imminent opening of Vinci Rooftop Restaurant and Bar, the hotel’s panoramic Italian eatery. On the ground floor, there is a daytime Dusit Gourmet outlet with a selection of pastries, salads and other casual eat-in or grab-and-go options.
Soi restaurant provides Dusit’s signature splash of Thainess, with a menu of well-executed Thai greatest hits. The green curry has an authentic kick to it. Don’t hesitate to ask for more chili on the side if some of the dishes are on the safe side, flavor-wise—the Thai chefs will be happy to oblige.
The must-try among the in-house dining at Dusit Le Palais Tu Hoa Hanoi is Pho Lua, the hotel’s outdoor chicken pho bar. The boiling broth of this scallion-laden northern-style chicken pho is poured from a kettle at the table to finish cooking the poultry to tender perfection. If Hanoi’s heat is a little too intense for outdoor dining, hotel staff will happily serve the steaming soup inside as well. Look for monthly one-dish specials, like Hoi An-style chicken rice.
Palais Lounge
Design-forward dining at Soi
Soi restaurant serves up authentic Thai
The Service
Dusit Le Palais Tu Hoa Hanoi does guest experiences very well, from sightseeing tours to in-house silk painting classes. Check-in was a breeze, and the front-of-house staff were always smiling and professional. When we asked for recommendations at Pho Ho Loi in the city, Tracy from the front desk translated its all-Vietnamese menu into English then texted it to us so we’d have her explanations on our phones. Talk about above and beyond the call of duty.
Other departments are still finding their way. The restaurants seemed to be having some teething issues, for example, and I felt there could have been more attention to detail—all fixable issues that hopefully will be addressed as this brand-new hotel hits its stride.
Would We Visit Again?
As a base for exploring West Lake further, absolutely. There are also the as-yet-unopened drinking and dining outlets and wellness amenities like an onsen we’d love to use on a future trip. And we’re sure that we’ll see improvement where it’s needed.
France, UK, and Spain lead luxury hotel bookings this year, showing strong growth and global appeal. France, UK, and Spain attract high-end travellers with world-class service, iconic destinations, and premium experiences. At the same time, Italy slips in the rankings, losing its long-held top position to its European neighbours. However, US and Canada hold strong in the luxury segment, maintaining steady demand and market share. France, UK, and Spain continue to capture the hearts of travellers seeking both style and substance. Meanwhile, Italy slips as travel patterns shift, but US and Canada hold strong by offering exclusive experiences and consistent service. This shift marks a new balance in global luxury hospitality. France, UK, and Spain are now shaping the future, while Italy slips behind, and US and Canada hold strong against changing travel trends.
France is back at the top of Europe’s luxury travel map. In July, Global Travel Collection (GTC) data revealed a 64% year-over-year jump in luxury hotel bookings across the country. Paris, Nice, and Marseille led the surge, marking the first time France has outpaced Italy in recent years. The figures show shifting traveller demand, with high-spending clients seeking diverse European destinations instead of concentrating solely on one country. For the first time since 2019, France’s allure has overtaken Italy’s long-standing dominance.
France Sees Record Growth in Luxury Travel
Global Travel Collection advisors in the US and UK recorded a dramatic increase in bookings for France this summer. Paris, with its timeless charm, was the clear favourite, clocking 2,710 booked nights. Nice followed with 1,313 nights, while Marseille recorded 286 nights. This growth signals that travellers are not only flocking to iconic capital cities but also to coastal and cultural hubs. France’s performance this summer underscores a post-pandemic trend—luxury travellers are willing to spend more for authentic, high-end experiences in varied locations.
The Hotels Leading France’s Luxury Boom
Among the most sought-after hotels was Le Bristol Paris, part of the prestigious Oetker Collection, celebrated for its Parisian elegance. In the south, The Maybourne Riviera, dramatically perched over the Mediterranean, became a magnet for ultra-wealthy travellers. These properties highlight the increasing preference for exclusive service, prime locations, and exceptional amenities. With average daily rates hitting $1,400, GTC’s clientele is clearly prioritising quality and uniqueness over price sensitivity, reshaping the European luxury accommodation market.
GTC’s Global Reach and Spending Power
In 2024 alone, GTC advisors generated $2.3 billion in luxury travel sales, organising trips to 179 countries. The network planned nearly 900 ultra-luxury journeys, each valued at over $100,000. These figures reflect the influence of curated, high-touch travel experiences in the luxury segment. For France, this translates into higher spending per trip, longer stays, and greater demand for personalisation—elements that reinforce its status as a premier destination for affluent travellers.
How France Defines True Luxury
France uses a clear and official system to rank its hotels. Atout France, the national tourism agency, awards between one and five stars based on service, comfort, and facilities. On top of this, it awards the Palace label to five-star hotels that go even further. These hotels must pass a review by experts who look at service, heritage, and the overall guest experience.
The Palace label is rare. Only 31 hotels in the country hold it. These hotels combine beauty, history, and perfect service. Many also offer fine dining restaurants, often with Michelin stars. This makes them popular with guests who want more than just a luxury stay.
Paris: The World’s Capital of Palace Hotels
Paris has the largest group of Palace hotels in one city. It offers a mix of grand landmarks and modern designs. Each has its own style but shares a focus on service and detail.
Some of the most famous include the Four Seasons Hotel George V, known for its Art Deco style and Michelin-starred restaurants. Le Bristol Paris, with its private garden, is another symbol of French elegance. Hôtel de Crillon brings 18th-century charm to the Place de la Concorde. Hôtel Plaza Athénée and Le Meurice mix glamour with strong links to Paris’s fashion and art scenes.
Other modern palaces like La Réserve, Park Hyatt Paris-Vendôme, and The Peninsula Paris show that new luxury can stand beside the historic greats. Together, these hotels keep Paris at the top of the world’s luxury travel market.
The French Riviera: Seaside Glamour and Modern Icons
The Côte d’Azur and Provence are famous for summer holidays filled with sunshine, yachts, and fine dining. This region has some of the most celebrated luxury hotels in Europe.
The Hôtel du Cap-Eden-Roc in Antibes is a true legend, with terraces overlooking the Mediterranean. The Grand-Hôtel du Cap-Ferrat offers clifftop gardens and private pool clubs. In Cannes, the Carlton recently reopened after a major restoration and is already winning top global awards. Nice’s Le Negresco mixes Belle Époque style with museum-level art collections.
Saint-Tropez is home to several Palaces, including Cheval Blanc, Château de la Messardière, and La Réserve Ramatuelle. These hotels combine beach clubs, private villas, and Michelin-starred dining. In the Provence highlands, La Bastide de Gordes and Villa La Coste add art and wine to the luxury mix.
The French Alps: Winter Palaces in the Snow
France’s luxury market is not just for summer. The French Alps, especially Courchevel 1850, have ski-in, ski-out Palace hotels that offer both sport and comfort.
Cheval Blanc Courchevel is a small but highly exclusive property with direct slope access. Les Airelles looks like a fairy-tale castle but offers modern service and dining. Hôtel Barrière Les Neiges blends chalet style with private cinemas and luxury spas. Aman Le Mélézin, part of the global Aman brand, adds its minimalist design to the Alpine setting.
These hotels make winter in France as appealing to luxury travellers as summer on the Riviera.
The Atlantic Coast and Wine Regions: Heritage Meets Wellness
Beyond Paris, the Riviera, and the Alps, France’s luxury map includes the Atlantic coast and wine country.
In Biarritz, the Hôtel du Palais was once Napoleon III’s summer home and still has the feel of imperial elegance. Near Bordeaux, Les Sources de Caudalie combines a vineyard setting with a spa famous for its wine-based treatments. In Champagne, the Royal Champagne Hotel & Spa offers panoramic views of vineyards, while Domaine Les Crayères is a grand château with two-Michelin-star dining. The Loire Valley’s Les Sources de Cheverny gives guests lakes, forests, and château-style rooms.
These hotels give travellers the chance to mix relaxation, food, and history in one trip.
Corsica: Wild Beauty with High-End Comfort
Corsica offers Mediterranean beaches and mountain scenery with a less crowded feel than the Riviera. Casadelmar in Porto-Vecchio has modern design and a two-Michelin-star restaurant. La Signoria near Calvi offers villas with views of both the sea and the hills. These properties mix natural beauty with high-end service, making them ideal for travellers seeking peace and privacy.
The Size and Strength of France’s Luxury Hotel Sector
France has 463 five-star hotels, showing the scale of its high-end offer. The 31 Palaces are the very top of this list. In 2024, luxury and upscale hotels saw better revenue growth than mid-market hotels. Investors spent €2.7 billion on hotels, the most since 2016, with Paris taking most of that total.
Even with global travel shifting, luxury demand stayed strong. Guests at this level are less sensitive to price and more focused on unique experiences. That is why France’s mix of city glamour, coastal resorts, ski retreats, and wine estates works so well.
Recognition Beyond France: Michelin Keys and Global Awards
In 2024, the Michelin Guide launched its “Keys” to rate hotels, just as it does for restaurants. In France, 24 hotels received three Keys, the top level. Another 38 earned two Keys, and 127 earned one Key. This adds another trusted sign for travellers looking for quality stays.
Global awards also shine on France. The Carlton Cannes won Forbes Travel Guide’s five-star rating in 2025 after its renovation. These honours help France keep its image as a leader in the luxury travel world.
Why Luxury in France Keeps Growing
France’s success comes from more than just beautiful buildings. The country blends strong traditions with innovation. Palace hotels honour their history but also invest in updates. The service is deeply personal, with staff trained to anticipate guest needs. Dining is a major part of the experience, with many hotels offering Michelin-starred restaurants.
The variety of locations also helps. Travellers can enjoy Paris in winter, the Alps in ski season, the Riviera in summer, and the wine regions in autumn. This year-round appeal keeps occupancy and rates strong.
The Outlook for 2025 and Beyond
The signs for France’s luxury hotel market are positive. Demand is high in every season, and new investment is coming into both historic and modern properties. Paris is expected to keep its position as the top luxury city, while the Riviera and Provence will remain summer magnets.
The Alps will see continued demand for luxury ski holidays, especially if snow levels remain stable. Wine regions and the Atlantic coast will grow as travellers look for less crowded but still premium experiences. Corsica will keep its niche appeal for those wanting luxury in a wilder setting.
With its Palace label, strong five-star base, and a growing list of global awards, France is likely to remain a leader in luxury travel for years to come. The country’s mix of heritage, style, and service will keep drawing the world’s most discerning travellers.
Italy Slips to Second Place in Luxury Travel
Italy still holds strong appeal, recording 777 booked nights in Rome, 725 in Milan, and 679 in Naples. Rome’s Hotel Eden, Lake Como’s Passalacqua, and Sardinia’s glamorous Romazzino remain client favourites. However, the distribution of travel demand suggests Italy’s once unchallenged dominance has eased. GTC’s latest data points to a more balanced spread of tourism spending across Europe, reducing over-reliance on a single country and allowing other destinations to shine.
UK Holds Third Spot with Steady Growth
The United Kingdom secured third place, with a 13% rise in July bookings over 2024. London continued to attract affluent visitors, particularly to properties like Ham Yard Hotel in Soho, Claridge’s in Mayfair, and Flemings Mayfair. The mix of heritage, urban vibrancy, and exclusive service remains a compelling combination for high-net-worth travellers. This growth reflects the UK’s ability to maintain relevance in a competitive European luxury market.
Spain Joins the Top Five Luxury Destinations
Spain’s July performance earned it a place among the top five destinations for GTC travellers. Barcelona’s hotels, including the Majestic Hotel & Spa, Mandarin Oriental, and Le Meridien, saw strong demand. Madrid’s Four Seasons and Ibiza’s Nobu Hotel Ibiza Bay and Six Senses Ibiza also ranked high. The combination of cultural depth, Mediterranean glamour, and luxury infrastructure is positioning Spain as an increasingly important player in Europe’s high-end travel scene.
France Rises to the Top of European Luxury Travel
France has taken the number one spot in luxury hotel bookings this summer. New figures from the Global Travel Collection (GTC) show that bookings in France grew by 64% in July compared to last year. This is the first time since 2019 that France has beaten Italy in the luxury travel market. The demand is being led by Paris, Nice, and Marseille.
GTC advisors in the United States and the United Kingdom booked 2,710 nights in Paris alone. Nice followed with 1,313 nights, and Marseille recorded 286 nights. This strong growth shows that France is attracting both city and coastal travellers. It is not only the capital that is drawing attention. The French Riviera and the southern ports are also in high demand.
Why France Is Winning Over Global Luxury Travellers
France’s success is the result of a mix of factors. The country has invested heavily in high-end hotels and experiences. Paris remains a centre for art, fashion, and fine dining. Nice and Marseille offer a blend of Mediterranean charm and cultural heritage. Hotels such as Le Bristol in Paris and The Maybourne Riviera in the south provide world-class service and stunning locations.
Another reason is traveller preference. Many luxury travellers want variety and new experiences. After years of Italy dominating, there is now a shift towards exploring other European countries. France offers both the glamour of the city and the calm of the coast, which makes it appealing to a wide range of visitors.
The Power of GTC in Luxury Travel
Global Travel Collection is one of the most influential networks of luxury travel advisors in the world. In 2024, GTC generated $2.3 billion in luxury travel sales. Its clients travelled to 179 countries. The average daily hotel rate for GTC bookings was $1,400. Advisors planned nearly 900 ultra-luxury trips worth over $100,000 each.
These numbers show the buying power of GTC’s clients. Their choices shape trends in the luxury market. When GTC’s data shows France leading, it reflects the preferences of some of the most affluent travellers in the world. This influence also extends beyond Europe, as their bookings impact global hotel revenues.
Italy Slips but Remains a Strong Player
Italy is still a major luxury destination, even though it has fallen to second place. In July, GTC booked 777 nights in Rome, 725 in Milan, and 679 in Naples. These cities remain favourites for high-end travellers. Rome’s Hotel Eden, Passalacqua on Lake Como, and Romazzino in Sardinia are some of the most booked properties.
Italy’s drop in position is not due to a lack of appeal. Instead, it reflects a more balanced spread of demand across Europe. Travellers are still flocking to Italy, but they are also exploring other countries. This change could benefit both Italy and its competitors by easing pressure on overcrowded destinations.
The UK’s Steady Rise in Luxury Bookings
The United Kingdom ranked third in GTC’s July data. Bookings were up 13% compared to the same month last year. London remains a key attraction for luxury travellers. Properties like Ham Yard Hotel in Soho, Claridge’s in Mayfair, and Flemings Mayfair continue to draw high-end guests.
The UK’s appeal lies in its mix of history, culture, and modern luxury. Visitors can enjoy theatre in the West End, shop in Bond Street, and dine in Michelin-starred restaurants. This steady growth shows that the UK is maintaining its place in the European luxury travel market.
Spain Joins the Top Five Luxury Destinations
Spain has made its way into GTC’s top five destinations for July. Barcelona is one of the most popular cities. Hotels like the Majestic Hotel & Spa, Mandarin Oriental, and Le Meridien are in high demand. In Madrid, the Four Seasons is a favourite, while Ibiza’s Nobu Hotel and Six Senses appeal to those seeking beachside luxury.
Spain’s strength is in its diversity. It offers world-class cities, beach resorts, and cultural experiences. This variety makes it an attractive alternative for luxury travellers who want more than one type of holiday in a single trip.
Luxury Hotel Trends Across Europe
The luxury hotel market in Europe remains strong in 2025. While overall hotel performance has been mixed in some months due to high comparison points from 2024, luxury hotels continue to lead in revenue per available room (RevPAR). Even when mid-scale and budget hotels face flat growth, luxury properties still see increases.
In 2024, Europe’s hotel sector saw very few weeks of decline, with luxury hotels often driving the highest gains. France, Italy, the UK, Spain, and Germany all recorded strong RevPAR growth in late 2024, and this trend is continuing in 2025.
The US Luxury Hotel Market Shows Resilience
In the United States, luxury hotels are also outperforming other categories. Year-to-date data through April 2025 shows luxury RevPAR up by 7.1%, while economy hotels grew by less than 1%. Weekly figures this summer show luxury as the only chain scale with consistent RevPAR growth.
High-end travellers in the US are willing to pay more for exclusive experiences. Luxury hotels in major cities and resort destinations are maintaining strong rates, even as some mid-market hotels see softer demand. This resilience is a sign that the top tier of the market is less affected by economic fluctuations.
Canada’s Luxury Travel Momentum
Canada has posted back-to-back months of revenue growth in 2025. In June, RevPAR rose by 4.4%, with an average daily rate of CAD 239.06 and occupancy at 75.6%. While public data does not separate luxury hotels from other categories, the overall strength of the market suggests that premium properties are also benefiting.
Cities like Vancouver, Toronto, and Montreal attract both domestic and international luxury travellers. High-end mountain resorts in Alberta and British Columbia also perform well in summer, offering unique experiences that match the standards of Europe’s luxury destinations.
Why Luxury Keeps Outperforming
Luxury hotels have an advantage in the current travel market. They attract high-spending guests who are less sensitive to price changes. They also offer experiences that cannot be easily replaced—personalised service, prime locations, and exclusive access to cultural or natural attractions.
In Europe, this means cities like Paris and Rome can command rates of over $1,000 per night and still see high demand. In the US and Canada, top-tier properties can sustain strong occupancy even when mid-tier hotels face challenges.
What This Means for 2025 and Beyond
If these trends continue, 2025 will see more investment in luxury hotels, especially in France. New openings in Paris, along the Riviera, and in cultural hubs like Lyon could keep France ahead of its competitors. Italy is likely to innovate and promote lesser-known regions to reclaim the top spot.
Spain and the UK are well-positioned to attract more luxury travellers through unique events, cultural experiences, and seasonal offers. In North America, major cities and exclusive resorts will continue to benefit from strong demand at the top end of the market.
The global luxury travel market is expanding. As more travellers seek high-quality, personalised experiences, the competition between destinations will grow. France’s rise in 2025 is proof that a well-rounded offering of city glamour, coastal beauty, and exceptional service can change the rankings in this competitive sector.
Analysis: A Shift in European Luxury Travel Patterns
The data suggests a significant rebalancing in European tourism. For the first time since 2019, France leads the market, driven by its ability to combine urban sophistication, coastal relaxation, and luxury hospitality. Italy’s slip is less about decline and more about diversification of traveller preferences. The UK and Spain’s strong showings point to an increasingly competitive luxury travel landscape. This shift benefits the wider tourism sector by distributing visitor numbers more evenly and reducing pressure on single destinations.
What This Means for Luxury Travel in 2025
If this trend continues, 2025 could see further expansion in France’s luxury offerings. More investment in high-end coastal resorts, boutique city hotels, and exclusive cultural experiences could follow. Italy is likely to innovate to reclaim the top spot, while Spain and the UK could push to capture greater market share. For travel advisors, these shifts mean more opportunities to craft unique, cross-country itineraries for affluent clients seeking variety, exclusivity, and memorable experiences.
US Hotel Growth Forecasts Cut for 2025–26 as CoStar and Tourism Economics Warn of Slower Travel Demand — this is the reality the hospitality industry is facing right now. US Hotel Growth Forecasts are no longer pointing to the strong upward trend many had hoped for. Instead, forecasts for 2025–26 from CoStar and Tourism Economics have been cut. The reason is clear. These respected analysts now warn that slower travel demand will weigh on hotels across the country.
CoStar has adjusted its figures to reflect a weaker outlook. Tourism Economics has done the same, warning that slower travel demand is becoming a more permanent feature of the market. This change means hotel owners and operators must prepare for tighter margins and more competition for guests. The cut to the US Hotel Growth Forecasts for 2025–26 shows how economic uncertainty, higher costs, and shifting travel habits can reshape an entire industry.
Slower travel demand, as CoStar and Tourism Economics explain, will not stop all growth, but it will make it harder to achieve. Hotels will need to work smarter to attract travellers, maintain rates, and protect profits. The forecast cut for 2025–26 is a signal to the industry to adapt now. Those who take the warnings from CoStar and Tourism Economics seriously will be better placed to navigate slower travel demand and still succeed in a changing market.
A Softer Road Ahead for US Hotels
The US hotel sector is preparing for a slower pace of growth in 2025 and 2026. CoStar and Tourism Economics have revised their forecasts down. They expect demand, Average Daily Rate (ADR), and Revenue Per Available Room (RevPAR) to grow less than first predicted. Profit levels remain stable, but margins are under strain. These updates were shared at the 17th Annual Hotel Data Conference.
The reason for the cut is clear. The economy is showing signs of slower momentum. Inflation is still high. International visitor numbers are not growing as fast as expected. Business and consumer spending is also softer. These factors are affecting how many people travel, how long they stay, and how much they spend on hotels.
What the Numbers Now Show
The changes to the forecast are measurable. For 2025, demand growth has been reduced by 0.6 percentage points. ADR growth is down by 0.5 points. RevPAR growth is lower by 1.1 points. For 2026, demand is cut by 0.5 points, ADR by 0.3 points, and RevPAR by 0.7 points.
GOPPAR, which is Gross Operating Profit Per Available Room, is unchanged. But margins will shrink. Forecasts now suggest a 0.3 percentage point drop in 2025 and a 2.3 point drop in 2026. Food and beverage costs are the biggest risk. Labour, energy, and supply chain costs also remain high.
The US hotel industry is heading for slower growth in 2025 and 2026. CoStar and Tourism Economics have cut their forecasts, signalling weaker demand ahead. The announcement was made at the 17th Annual Hotel Data Conference. Key measures like demand, Average Daily Rate (ADR), and Revenue Per Available Room (RevPAR) are all set to drop. Demand is expected to fall by 0.6 percentage points in 2025 and 0.5 in 2026.
The downgrade reflects the impact of persistent inflation and changing travel behaviour. It also shows that global trade and political uncertainty are shaping travel patterns. While the drop is modest, it comes at a time when hotels are already adjusting to slower international arrivals and tighter consumer spending.
Why the Forecast Has Been Cut
Amanda Hite, president of STR, explained that inflation remains a key factor. Travellers are more cautious with spending. Tough calendar comparisons with previous peak years also make growth harder to achieve. Travel patterns are shifting, with shorter booking windows and fewer extended stays.
These trends are hitting hotel performance across both leisure and business travel segments. The slowdown is not only about fewer guests but also about how much they are willing to spend per stay. Even with these headwinds, industry leaders believe recovery is still possible in the medium term.
Inflation and Travel Patterns Shape 2025 Outlook
Persistent inflation continues to eat into both consumer and corporate travel budgets. Higher prices for flights, food, and experiences have forced many travellers to shorten trips or downgrade hotel choices. This shift reduces ADR growth potential and impacts revenue targets.
Hotels are seeing a change in demand sources. While domestic leisure travel remains resilient, business travel and group bookings have yet to return to pre-pandemic levels. These patterns have made forecasting more complex and forced operators to rethink pricing strategies.
Tariffs and Trade Talks Add to Industry Uncertainty
Aran Ryan from Tourism Economics noted that while the US economy is slowing, it should avoid recession. The bigger concern is the drag from tariffs and ongoing trade negotiations. Tariffs can affect travel indirectly by increasing costs for imported goods and reducing overall consumer confidence.
The conclusion of trade talks could lift sentiment and help stabilise hotel performance. For now, uncertainty over policy direction continues to limit investment and expansion plans for many hotel operators. This environment makes it harder for the industry to commit to large-scale developments.
RevPAR and ADR Growth Lose Momentum
The revised forecast points to slower growth in key performance indicators. RevPAR, a crucial measure of hotel health, is expected to grow more slowly than previously projected. ADR will also face pressure as operators work to keep rooms filled amid softer demand.
For many hotels, the focus in 2025 will be on maintaining occupancy while protecting profitability. This could mean more targeted promotions, dynamic pricing strategies, and a sharper focus on value-added services to attract guests. The competitive landscape will become more intense as operators fight for market share.
ADR and RevPAR Lose Pace
ADR is still expected to rise in 2025 and 2026. But the pace of increase will be slower. This means hotels may not be able to raise rates as much as they did in the last two years. RevPAR, which combines occupancy and ADR, will also grow more slowly.
Hotels will need to be more creative in pricing. Offering value-added packages, loyalty rewards, or flexible booking terms may help keep occupancy up while protecting ADR. Revenue managers will have to focus on balancing price and volume to avoid losing market share.
Margins Under Pressure
Even with stable GOPPAR, hotel margins are forecast to shrink. The main reason is rising costs. Food and beverage departments are under particular strain. Ingredients cost more. Labour costs are climbing. Energy prices remain high.
Hotels will need to find ways to operate more efficiently. This could mean adjusting menus, reducing waste, and using technology to manage staffing. Savings in these areas can help offset higher costs without hurting the guest experience.
The Impact of Tariffs and Trade
Trade disputes and tariffs are an added layer of uncertainty. They can raise costs for imported goods used in hotels, from food to furniture. They can also reduce consumer confidence, making people less likely to travel.
The conclusion of trade talks could bring a lift in sentiment. For now, operators remain cautious about investing in new projects until the policy environment becomes clearer.
The Role of International Travel
International visitors are key to many US markets. Cities like New York, Miami, Los Angeles, and San Francisco depend on overseas travellers for a large share of their hotel business. Visa delays, higher airfares, and political issues have slowed the return of these guests.
Marketing efforts abroad could help. Tourism boards and hotel brands are already targeting campaigns to bring more visitors from Europe, Asia, and South America. If successful, this could ease some of the pressure on urban hotel performance.
Preparing for a Slower Market
Hotels can still succeed in a slower growth market. The focus should be on attracting domestic travellers, enhancing loyalty programmes, and building strong relationships with corporate clients. Flexible pricing can help keep occupancy stable.
Working with event organisers, airlines, and attractions can also create new demand. Bundled deals and cross-promotions can give guests more reasons to book.
GOPPAR Stable but Margins Under Pressure
While the Gross Operating Profit Per Available Room (GOPPAR) forecast remains unchanged, profit margins are expected to tighten. Rising expenses, especially in food and beverage operations, are the main concern. Labour costs, energy prices, and supply chain pressures are also contributing factors.
Hotels may need to adjust service models to manage these costs without damaging guest satisfaction. This could include menu adjustments, energy efficiency upgrades, and selective staffing changes. Operators will have to balance cost control with maintaining the quality of guest experiences.
Policy Shifts Could Lift 2026 Recovery
Both CoStar and Tourism Economics expect conditions to improve in 2026. Tax cuts and reduced policy uncertainty could boost consumer spending and corporate travel budgets. This would help demand recover and support better performance for ADR and RevPAR.
A stabilising global economy and improved trade relations could also encourage more international travel to the US. For now, hotel operators will need to navigate a challenging year while positioning themselves for a possible rebound.
The Role of International Visitors in Growth
Declining international visitor numbers have been a notable factor in the 2025 downgrade. Visa delays, higher travel costs, and geopolitical issues have slowed inbound tourism. This impacts major US cities more heavily, where overseas travellers make up a significant portion of hotel demand.
If inbound travel improves in late 2025 and into 2026, it could give the hotel sector a much-needed lift. Tourism boards and hotel brands are expected to increase overseas marketing efforts to capture this opportunity.
Strategies Hotels Can Use to Offset Slowdown
Hotels can still find growth opportunities despite the weaker forecast. Focusing on domestic markets, leveraging loyalty programmes, and investing in targeted digital marketing can help maintain occupancy. Flexible pricing and tailored packages can also draw in travellers seeking value.
Partnerships with airlines, attractions, and event organisers could generate new demand streams. Hotels that adapt quickly to changing travel patterns will be better placed to outperform in a slower market.
Industry Remains Cautiously Optimistic
Despite the downgrade, industry leaders are not predicting a downturn as severe as past crises. The fundamentals of US tourism remain strong. There is still steady demand for leisure travel, and business travel is slowly recovering.
The key for 2025 will be resilience and adaptability. Hotels that manage costs, maintain service quality, and stay aligned with evolving guest needs can still achieve healthy performance even in a softer growth environment.
Long-Term Growth Still Possible
While 2025 will be a year of slower growth, the long-term outlook for the US hotel sector remains positive. Economic cycles are natural, and recovery periods often lead to innovation and stronger business models.
Investments in technology, sustainability, and guest experience will be critical in shaping the industry’s future. Those who prepare now will be best positioned to capture market share when demand accelerates again.
Among the noteworthy quotes from this week’s stories is STR’s Amanda Hite talking about current performance and potential recovery.
QUOTE OF THE WEEK “Unrelenting uncertainty and inflation, coupled with tough calendar comps and
changing travel patterns, have caused lower demand. Additionally, as the year
has unfolded, we’ve seen rate growth converge closer with demand. We expect
little change in the economic outlook over the next 18 months, but we are
optimistic that once trade talks have concluded and the impact of the budget reconciliation
bill comes to fruition, hotel performance will recover.” – Amanda Hite,
STR Read story
“As we lap easier comparisons to last year, we believe
RevPAR could be up in the low- to single -digits for the balance of the year. We
anticipate our properties in Asia Pacific, excluding Greater China, will have
the strongest growth in RevPAR of any geographic regions as they continue to
benefit from significant international inbound travel in Europe.” – Joan Bottarini,
Hyatt Hotels Corp. Read story
“Our momentum continued in the first half of 2025, with
further achievements in accelerating the growth of our brands, expanding in key
geographies, strengthening hotel owner returns, driving ancillary fee streams,
delivering cost efficiencies, and returning surplus capital to shareholders,”
said IHG Hotels & Resorts CEO Elie Maalouf. “We remain on track to meet
full year consensus profit and earnings expectations. While some shorter-term
macroeconomic uncertainties remain, many are subsiding, and we are confident in
the ongoing successful delivery of our growth algorithm.” – Elie Maalouf, IHG
Hotels & Resorts Read story
“This strategic acquisition marks the next chapter in Choice
Hotels’ 70-year presence in Canada, Canada presents an attractive opportunity
with the lodging market projected to grow at an average annual rate of more
than 5% over the next five years, reaching over $50 billion in total revenue by
2030.” – Patrick Pacious, Choice Hotels International Read story
“The pipeline of single assets, portfolios and platforms
available (or expected to become available) on an off-market and marketed basis
in the near-to-medium term is robust. Both L+R and Midstar have decades of
experience in transacting across this region and will make full use of our
combined networks and deal sourcing capabilities.” – Cody Bradshaw, L+R Hotels Read story
“Generally, trades that are occurring are smaller in size
and being consummated with financing through debt funds with less restrictive
requirements than large banks, and regional banks with more favorable spreads.
However, so far this year there have been several large hotel sale transactions
of ‘trophy’ properties and/or institutional grade assets that can be acquired
for less than replacement cost.” – Daniel Lesser, LW Hospitality Advisors Read story
“We would expect to continue to see over the next few years
that we would have, call it roughly a third of rooms opening that are
conversions… We will continue [strength] in the conversion space. As we look at
a pipeline that is over 5% higher than a year ago, with this heightened element
of several years of conversions, we’re confident that we’re building the track
record for mid-single digits net rooms growth over the next several years.” –
Leeny Oberg, Marriott International Read story
“I’m excited about the investments we’ve made in our core
portfolio, as we continue to enhance asset quality and strategically allocate
capital… We are confident that reinvesting in our portfolio is the highest and
best use of our capital, positioning us for sustained growth and outperformance.”
– Thomas Baltimore, Park Hotels & Resorts Read story
“We are a great engine for the recycling of intellectual
property in the hotel space and bringing the more impactful, iconic brands to
where they need to be for the next cycle of that box’s useful life.” – Kaunteya
Chitnis, Portman Holdings Read story
“Our activity in Spanish hotels, with an emphasis on the
luxury and convenience segments, is in line with of our wider thematic focus on
the European accommodation sectors, covering living, hospitality and everything
in between, where there is a shortage of institutional-quality product relative
to investor demand.” – Saul Goldstein, ActivumSG Read story
“The Detroit hospitality market has become very dynamic and
has many more demand drivers than just automotive companies. In that time, we
opened the Element Detroit at the Metropolitan [Building], where we also
operate the Monarch Club rooftop bar and The Lone Goat pub on the ground floor,
and then converted [an] Aloft to the Hotel David Whitney, Autograph Collection
(which opened last year).” – Adam Dahan, Azul Hospitality Group Read story
“The Nashville hospitality market continues to demonstrate
impressive growth and resilience, particularly in the future East Bank
district, which is poised to become a vibrant epicenter anchored by Oracle’s
forthcoming headquarters.” – Pranav Bhakta, Driftwood Capital Read story
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