Analysts painted a mildly optimistic picture of the lodging industry in the coming years at the Americas Lodging and Investment Summit in Los Angeles this week, as top executives from some of the largest hotel companies in the world were bullish about expected deregulation and business confidence under a Trump administration but also expressed concern about the general unpredictability stemming from such policies as travel bans.
Corporate transient demand for hotels likely will have "modest improvements" in 2025, Lodging Analytics Research & Consulting president and co-founder Ryan Meliker said. "We're not talking above massive growth; we're not talking about negative growth," he said.
For his analysis, Meliker said corporate travel demand hinges largely on corporate profit growth, which is expected to be negative in 2025 after being positive in 2024, and the stock market, which he said is not likely to grow this year at the rates seen in the past few years. Those factors "create headwinds for corporate transient," but it will be offset as more companies return their employees to the office this year, which will keep the segment in positive territory, according to Meliker.
Convention center data indicates a 5 percent year-over-year increase in group demand this year, following a 4 percent increase in 2024, he added.
In the wider industry, STR president and CEO Amanda Hite said expectations have not shifted dramatically from earlier forecasts, and the firm now projects the 2025 U.S. average daily rate to increase 1.6 percent year over year, with revenue per available room up 1.8 percent. The luxury segment is seeing "good demand," with two-thirds of luxury hotels seeing demand increases in 2024, and upper upscale hotels will have a "solid, consistent performance" this year, she said. The midscale segment is grappling with supply growth, while economy hotels will see positive RevPAR growth amid negative supply growth and stronger-than-expected demand, according to Hite.
Kalibri Labs CEO and cofounder Cindy Estis Green said she was "a little more optimistic" on 2025 U.S. RevPAR growth this year than Hite, projecting an increase in the range of 1 to 3 percent year over year that will continue for the next few years. At the same time, hotels will see expenses increase in the 5 to 10 percent range, which means "focus on expenses becomes critical," she said.
That includes distribution expenses, as hotels' brand-dot-com sites and online travel agencies are currently in a "horse race" as both grow share of overall bookings, she said. Global distribution systems' share of hotel business is "dropping off as commercial business is moving to brand-dot-com or OTAs or other channels," Green said.
Trump Talk
A panel of CEOs at ALIS were largely optimistic about U.S. industry growth under the Trump administration, though not without some caveats. Hilton Worldwide CEO Christopher Nassetta said the industry could see better business travel demand if there was "certainty" around issues that have been up in the air over the past few years, such as regulations and labor, that might encourage businesses to loosen the reins on spending.
"If [Trump's] able to get momentum on the things he's most focused on, which is the border and immigration, the regulatory environment and getting the tax structure fixed, it broadly will be beneficial to the industry," Nassetta said. "If he does, we should expect that will translate into our business being stronger in the next couple of years than we thought six months ago."
Nassetta said there already has been some pickup in demand since the election, though he said it could be a "sugar high." Wyndham Hotels & Resorts CEO Geoffrey Ballotti said the Trump administration will be more open to listening to the business community than the Biden administration, as he and Nassetta bantered about the number of times industry executives had been invited to the White House under the first Trump administration compared with Biden—the latter of which Nassetta said was "zero."
There are other aspects to the administration that give the CEOs pause, however, as illustrated by last weekend's dustup between Trump and Colombian President Gustavo Petro, with Petro blocking a plane of deportees from the U.S. from landing and Trump responding with threats including tariffs, visa sanctions and enhanced customs inspections for Colombian nationals.
Marriott International president and CEO Anthony Capuano said tariffs were "absolutely" going to be a part of the Trump strategy, with several of his cabinet members in favor of them and also their use as a way to offset lost revenues in the form of tax cuts. But the incident with Colombia, though short-lived, illustrated another potential issue.
"I was a little more concerned that the administration's reflex was to talk about enhanced vetting of incoming travelers," Capuano said. "You think about all the work the industry has done to remove friction with cross-border travel, and you think back to the first [Trump] administration's travel bans and other things that are obviously so impactful in a negative way in our business."
As such, the executives were hopeful for a clear and dedicated focus on the economy for the industry's sake.
"If the administration stays focused on driving economic vitality, we should be in good shape," Capuano said. "If we get distracted with travel bans and [fellow panelist and Accor Group deputy CEO Jean-Jacques Morin] has to worry about a plan to change the name of the English Channel to the American Channel and all sorts of wacky things, that's going to distract us."