CBRE predicts modest growth in hotel revenue in 2025, driven by city centers

CBRE plans to see a moderate growth in hotel revenue per available room (REVPAR) in 2025, led primarily by city markets and regional leisure destinations.

2025 revenue forecast

CBRE RevPAR is expected to grow by 1.3% in 2025, slightly higher than the February forecast of a 2.0% increase in February. This estimate is based on an increase in occupancy of 14 basis points (BPS), with an average daily rate (ADR) up 1.2% year-on-year.

The company’s forecast also sees GDP growth rate of 1.4% this year, which is 2.4% lower than February’s forecast. The average inflation rate is also expected to reach 2.9% in 2025, an increase of 40 basis points from February’s forecast. Despite slow forecasts for economic growth, CBRE remains optimistic about the performance of the accommodation industry.

Factors that affect Revpar’s growth

Several factors are expected to drive RevPAR growth in 2025. Growth of group and business travel, weaker dollar and lower air tickets may encourage domestic travel, while increasing inbound international visits. These conditions are particularly beneficial for city hotels, regional resorts and driving destinations.

Rachael Rothman, head of hotel research and data analysis at CBRE, predicts Revpar’s growth will be between 1.0% and 3.0% in the next few years. Major events such as the 2026 FIFA World Cup, the 2028 Summer Olympics, and new attractions such as the Orlando theme park will stimulate demand and maintain growth unless a sudden recession occurs.

Supply growth and market prospects

Although economic growth and hotel demand are expected to slow down soon, supply growth is also expected to slow down due to increased construction costs, higher financing rates and strict labor markets. Michael Nhu, senior economist and global hotel director at CBRE, expects supply growth to average 0.8% per year over the next four years, half of the industry’s historical average.

CBRE has added 11 new leisure-oriented markets to its latest forecast, including Boulder and Colorado ski markets, California Wine Country, Panhandle, Florida and Utah National Park. These additions reflect the latest changes in travel trends and provide insights into emerging opportunities.