US Hotel Demand Struggles as Summer Peaks: A Closer Look at Declining Performance Across Major Cities, What Travellers Need To Know

Published on July 19, 2025

With the summer gearing up to its summer peak, U.S. hotels are on pace to a challenging peak in demand, as revenue per available room (RevPAR) decreased by 3.7% for the week of July 6-12, following a string of losing weeks including the 1.1% decrease the week prior. The summer finds U.S. hotels traditionally buoyed by strong demand, but this year’s season is underwhelming hoteliers. The weakness is pronounced on the weekday (Monday through Wednesday) side, which is lackluster and indicates weak business travel. By contrast, weekends have held steady, though leisure travel is also slowing amid concerns over the economy and increasing competition from alternate forms of lodging like short-term rentals, camping and cruises.

This divergence in travel behavior is striking, as total TSA passenger screenings were on the rise over the same interval that hotel demand was sagging. This could mean that travelers are choosing alternatives to the traditional hotel stay. As more people look to alternatives, such as Airbnb, and VRBO, the hotel industry in the U.S. is feeling the pressure of growing competition.

Business Travel Declines While Leisure Remains a Mixed Bag

The soft hotel demand across the U.S. is largely attributed to the continued weakness in business travel. Group business demand has been particularly lackluster, with luxury and upper-upscale hotels experiencing a 9.8% decline in group demand year-over-year. While the average daily rate (ADR) for group business has remained strong, growing by 3.6%, this increase has not been enough to offset the drop in demand.

Luxury hotels saw a 2% drop in RevPAR, while the decline in other chain scales was more pronounced, with economy chains reporting a 5% drop. The performance of hotels across the U.S. is not uniform, with higher-end hotels faring slightly better due to their appeal to wealthier travelers, while budget chains struggle more. The trend of weaker weekday performance was observed across all hotel segments, with upper-upscale hotels experiencing the largest weekday RevPAR decline of -7.6%.

On weekends, however, luxury and upper-upscale hotels showed better performance, with RevPAR growing by 6.5% and 2.6%, respectively. This reflects a stronger market for leisure travel, but even this has been tempered by rising economic concerns and competition from alternative travel accommodations.

St. Louis and Other Key Cities See Mixed Results

In the midst of these challenges, some U.S. cities are seeing positive growth. St. Louis, for example, outperformed the majority of the top 25 U.S. hotel markets, posting a 30.8% increase in RevPAR. This success is largely attributed to the 10-day General Conference of the Seventh-day Adventist, held from July 3-10, which brought a significant boost in group demand. St. Louis has consistently ranked among the top three hotel markets in recent weeks, benefiting from both the conference and a generally strong tourism environment.

Meanwhile, cities like Houston struggled with hotel demand, facing tough comparisons to last year’s Hurricane Beryl, which negatively impacted the market. In Houston, RevPAR saw a dramatic decline of 34.2%, with 110,000 fewer hotel rooms sold compared to the same week in 2023.

Other cities also had mixed performances. Atlanta experienced a 6% growth in hotel RevPAR, bolstered by a strong weekend driven in part by Beyoncé’s Cowboy Carter tour. Chicago and Orange County/Anaheim both saw modest growth of 4.2%, though the latter was entirely driven by weekend performance. San Francisco had a strong weekend with a 35% increase in RevPAR, but its weekday performance suffered with a 26.5% decline.

Las Vegas, on the other hand, continues to struggle with weekly RevPAR declines, though the city has moved closer to the middle of the top 25 markets, signaling a potential recovery if trends stabilize.

What Lies Ahead for the U.S. Hotel Industry?

With the summer season now in full swing, the question remains: is the U.S. hotel industry already peaking? Historical data suggests that July is typically the peak for U.S. hotel demand, but this year’s performance points to a potential decline compared to 2023. While consumer intentions to travel remain strong, concerns about economic factors such as inflation and increasing accommodation costs have begun to temper spending. Research firms like Longwoods and Future Partners report that while consumers still plan to travel, they are exercising greater caution in their spending habits.

Global hotel markets outside the U.S. are faring better, with RevPAR growth of 2.2% globally, driven primarily by ADR increases. Countries like Japan, the U.K., and Canada have seen positive performance, with Japan’s RevPAR up 22.1% for the week, and the U.K. posting 7.5% growth. These international markets are benefiting from strong domestic demand, favorable exchange rates, and fewer competing alternatives, such as short-term rentals.

The Road Ahead: U.S. Hotels Brace for Further Challenges

What’s next: more of the same for U.S. hoteliers in the form of declining demand and ADR (average daily rates), combined with competing with alternative accommodations. The increase in international travel and desire for short-term rentals and cruises could be presenting a challenge for U.S. hotels to sustain solid performance rates through the rest of 2023 and into 2024.

Though individual cities like St. Louis may still outshine their peers, the broader sector is under pressure from economic worries, shifting travel demands and competition from alternatives like newer forms of stay over lodging.

Sources:

1. U.S. Department of Transportation (DOT)
2. U.S. Travel Association
3. American Hotel & Lodging Association (AHLA)