CoStar and Tourism Economics Elevate US Hotel Performance Outlook for 2026 and 2027
CoStar and Tourism Economics have revised their projections for the United States hotel sector upwards for both 2026 and 2027. The updated outlook follows robust first-half results, driven by major events and strong travel demand across leisure and business segments.
Upgraded Forecasts Follow Strong H1 Performance
Leading analytics firms CoStar and Tourism Economics have significantly upgraded their outlook for US hotel performance in the current year and 2027. This revision follows a stronger-than-expected first half of 2026 for the sector. US hotels surpassed initial expectations, driven by resilient leisure and business travel.
Key events, including the World Cup and America 250 celebrations, contributed to this robust performance. Amanda Hite, President of STR, a CoStar subsidiary, stated that the US hotel industry sold a record number of room nights in the first half of the year. This represents an increase of 11.4 million room nights compared to the same period in 2025. Room revenue also saw a substantial rise, increasing by over $5.4 billion during this time.
Revised Projections for Revenue and Occupancy
For the full year 2026, CoStar and Tourism Economics now project US Revenue Per Available Room (RevPAR) to increase by 4.4% year-over-year. This marks a notable rise from their earlier forecast of 2.8%. The firms also adjusted their occupancy expectations for the current year, now predicting 63.1%, up from a previous 62.8%.
Average Daily Rate (ADR) is also set to increase by 3.1% year-over-year in 2026, an improvement from the prior 2% projection. Looking ahead to 2027, the outlook remains positive. CoStar and Tourism Economics forecast occupancy to reach 63.4%, with ADR increasing by 1.6% year-over-year. This will result in a projected RevPAR growth of 2.1% for 2027.
Underlying Drivers of Continued Growth
Aran Ryan, Director of Industry Studies with Tourism Economics, anticipates continued growth in travel activity into 2027. He attributes this sustained demand to several macroeconomic factors. Stable labour markets, recent wealth gains among consumers, and easing inflation are expected to maintain resilient consumer spending.
Furthermore, business investment is broadening beyond artificial intelligence-related projects, contributing to corporate travel demand. Group travel, a significant segment for hotels, also shows ongoing recovery. These elements collectively support the optimistic long-term view for the US hotel sector.
The industry benefits from a foundational economic environment that encourages both personal and corporate travel expenditure.
Emerging Challenges and Industry Considerations
Despite the overall positive outlook, some challenges are on the horizon. Amanda Hite notes that while the second half of 2026 will see top-line growth driven by ADR, performance gains may be slightly lower than in the first half. A period of mid-year weakness is also expected in 2027, due to challenging year-over-year comparisons.
Rising operational expenses present another concern for the industry. Hite indicates that these costs, including labour, will increase at a rate exceeding inflation in both 2026 and 2027. Additionally, international visitation is projected to show only modest improvement.
Aran Ryan highlights prolonged US-Canada trade tensions as a potential headwind for this segment, requiring close monitoring by industry stakeholders.
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