CoStar, the parent company of hotel analytics firm STR, and Tourism Economics have revised upward their joint U.S. hotel forecasts for 2026 and 2027, citing stronger-than-expected demand from group and transient segments to start the year, the companies announced Monday.
The firms now forecast year-over-year U.S. revenue per available room growth of 2.8 percent in 2026 and 1.6 percent in 2027, up 1 percentage point and 0.2 percentage points, respectively, from prior forecasts. That growth is driven largely by average daily rate, which is projected to rise 2 percent year over year in 2026 and 1.4 percent in 2027. Occupancy is expected to increase 0.5 percentage points in 2026; it was previously forecast to decline.
"Since our last revision, the industry has seen sustained performance growth, with room demand up by more than 8 million room nights year over year through the first four months of 2026," CoStar Group national director of hospitality analytics Jan Freitag said in a statement.
Speaking at the New York University International Hotel Investment Forum on Monday, Freitag said the U.S. hotel industry now is seeing "widespread demand growth forecast specifically in the middle of the chain scale—so, upscale, upper midscale and midscale." That marks a change from recent years when U.S. demand growth has been concentrated largely in the luxury and upper upscale segments.
"We're projecting that this year is actually very much a reversal from last year and that room demand is going to continue to grow and give us some pricing power," Freitag said. Despite that, he noted that "solid" gains in ADR and RevPAR still won't keep up with the rate of inflation.
Tourism Economics president Adam Sacks in his own remarks at the NYU conference said the U.S. hotel industry is navigating competing forces of tailwinds and turbulence.
As turbulence, he cited high gas prices, historically low consumer sentiment and "international travel collapse," particularly from Canadian visitors.
As tailwinds, Sacks argued the resilience of consumer spending was underpinned by a sturdy U.S. labor market, with more than 100,000 jobs added in April following 185,000 in March, and "really strong" household balance sheets. He also noted that even as sentiment has plummeted, real consumption has continued to grow, pointing to a "decoupling" between how consumers feel and how they spend.
"Despite the turbulence that we see, we do expect tailwinds to prevail," Sacks said.