United States, September 2, 2025
News Summary
The U.S. hotel industry is facing challenges as revenue per available room (RevPAR) has fallen for the third consecutive week, decreasing by 1.3%. This decline is mainly attributed to reduced occupancy rates, with the average daily rate (ADR) also dipping slightly. Key markets like Chicago and Houston have notably contributed to this downturn, with Chicago’s RevPAR seeing a significant year-on-year drop. Despite some gains in occupancy, the overall market shows declining trends, particularly for midscale and economy hotels, while luxury segments continue to report growth.
U.S. Hotel Revenue Per Available Room Declines for Third Straight Week
The U.S. hotel industry is experiencing troubling trends as the revenue per available room (RevPAR) fell by 1.3% for the week of August 17-23. This marks the third consecutive weekly decline and the tenth decline in RevPAR over the past 12 weeks. The downturn is primarily attributed to drops in occupancy rates, although the average daily rate (ADR) also saw a slight decrease of 0.2% during this period.
Impact of Major Markets
The top 25 U.S. hotel markets played a significant role in this national RevPAR decline, contributing to an overall drop of 3.8%. In contrast, markets outside of this top tier recorded a slight increase of 0.4%. Notably, the cities of Chicago and Houston were largely responsible for the downturn in RevPAR across the country. Excluding the performance of these two cities, the national RevPAR remained relatively stable.
Chicago’s Hotel Market Challenges
Chicago’s hotel market has faced significant challenges, particularly when comparing revenues to the same week during last year’s Democratic National Convention. The RevPAR in Chicago declined by 19.9%, while the ADR plummeted by 22.3%. Despite the declining ADR and RevPAR figures, Chicago’s hotel occupancy actually increased by 2.2 percentage points. This upward trend in occupancy has been observed for two consecutive weeks and for 26 out of the past 34 weeks, particularly benefitting from gains in seven out of eight submarkets. In the central business district, occupancy reached 76.9%.
Houston’s Continued Struggles
Meanwhile, Houston continues to battle significant year-over-year performance challenges. Last year’s flooding events severely impacted the market, leading to a surge in hotel demand that is not being replicated this year. As a result, RevPAR has shown a striking year-on-year decline of 29.5% as of August 31, 2024. All classes of hotels in Houston reported declines, with midscale and economy hotels seeing the steepest drops—RevPAR for these categories fell over 50% in recent weeks. Experts speculate that the ongoing performance issues in Houston may continue until the end of the year, although potential improvements could emerge in the upcoming weeks.
Overall Market Trends
Across the U.S., hotel RevPAR has remained flat or declining over the past eight weeks, with 85 out of 172 defined STR markets reporting declines similar to previous weeks. Notably, luxury hotels are the only segment to experience growth in RevPAR, reflecting consistent trends over the last four weeks. In contrast, economy-class hotels have faced significant challenges, with a 3.3% decline in RevPAR driven primarily by falling ADR rates.
Looking ahead, the month of August will conclude with an additional Sunday, potentially leading to lower overall performance when compared to last year. Even as Labor Day travel is expected to set records, forecasts suggest that RevPAR decreases will likely align with or fall below levels seen in July. Additionally, the timing of Rosh Hashanah moving from October to September is projected to impact travel patterns this month.
Global Context
Internationally, hotel RevPAR outside the U.S. rose by 5.4% for the second consecutive week, attributed in part to the competitive atmosphere surrounding the recent Olympics in France, where RevPAR soared by 24%. Numerous other countries have also reported substantial increases in hotel RevPAR in the past month.
FAQ Section
What caused the decline in U.S. hotel RevPAR?
The decline is primarily due to decreases in occupancy rates and a slight drop in average daily rates (ADR).
Which cities were most responsible for the RevPAR decline?
Chicago and Houston were the main contributors to the national downturn in RevPAR.
How did Chicago’s hotel market perform this week compared to last year?
Chicago’s RevPAR declined by 19.9% compared to the same week last year, alongside a 22.3% drop in ADR.
What trends are being observed in hotel occupancy rates?
In Chicago, hotel occupancy has actually increased by 2.2 percentage points despite the declines in RevPAR and ADR.
Are luxury hotels affected by the RevPAR decline?
Luxury hotels are the only category showing growth in RevPAR, while other segments have faced declines.
How does the situation in Houston differ compared to last year?
Houston’s hotel demand has dropped by 29.5% compared to the previous year, largely due to last year’s flood-related surge in demand not being replicated.
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Additional Resources
- CoStar: U.S. Hotel Performance Continues August Slide
- Wikipedia: Hotel Industry
- Hotel News Resource: U.S. Hotel Market Overview
- Google Search: U.S. hotel market
- Travel and Tour World: Arizona Joins States with Skyrocketing Tourism
- Google Scholar: Hotel Demand Trends
- CoStar: Hotel Demand Hits Low Note
- Encyclopedia Britannica: Hotel
- Travel and Tour World: U.S. Hotel Market Overview
- Google News: Hotel Revenue Per Available Room
Author: STAFF HERE HOUSTON TX WRITER
HOUSTON STAFF WRITER The HOUSTON STAFF WRITER represents the experienced team at HEREHouston.com, your go-to source for actionable local news and information in Houston, Harris County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Houston Livestock Show and Rodeo, Art Car Parade, and Chevron Houston Marathon. Our coverage extends to key organizations like the Greater Houston Partnership and Houston Area Urban League, plus leading businesses in energy and healthcare that power the local economy such as ExxonMobil, Schlumberger, and Houston Methodist. As part of the broader HERE network, including HEREAustinTX.com, HERECollegeStation.com, HEREDallas.com, and HERESanAntonio.com, we provide comprehensive, credible insights into Texas's dynamic landscape.
