An uncertain economic environment and a soft second quarter has led consulting giant PwC to prune its forecast for full-year 2025 U.S. hotel performance, the company announced Wednesday. While inbound international business travel is showing some strength, the outlook for domestic demand is "mixed" according to PwC.
PwC in its May 2025 Hospitality Directions report US projected that 2025 U.S. revenue per available room would increase 0.9 percent year over year to $101.16, compared with a 1.5 percent increase it projected in its most recent prior forecast, in November 2024. (PwC revised some full-year 2024 data upward in the new forecast.)
PwC projects 2025 U.S. hotel occupancy of 63.1 percent, up 0.1 percentage points year over year, the same increase it forecast in November. The company projects average daily rate to increase 0.8 percent year over year to $160.30, compared with a 1.3 percent increase it forecast in November.
PwC cited "macroeconomic headwinds," including "an uncertain tariff environment, an in-flux immigration policy, elevated interest rate environment, and potentially higher inflation" along with geopolitical uncertainties as drags on overall 2025 U.S. economic performance as well as hotel demand.
The company also projected "significant deceleration in travel demand in Q2," to the tune of a 1.2 percent year-over-year decrease in second-quarter RevPAR, with a rebound in the second half of the year "as the macroeconomic picture becomes clearer and potential impacts of major economic and fiscal policies are better absorbed." PwC forecast RevPAR increases of 1.1 percent and 1.8 percent in the third and fourth quarters, respectively.
PwC in the report said domestic U.S. corporate travel is "showing mixed results, with stable premium offerings and group travel demand despite softened lower-tier demand," while international inbound business travel demand remains strong.
Analysts including STR and Tourism Economics, Lodging Analytics Research & Consulting and CBRE Hotels Research each in recent weeks also have softened their 2025 U.S hotel forecasts owing in part to economic uncertainty.