US Hotel Industry Sees Continued Decline in Occupancy and Rates
The U.S. hotel industry continues to show signs of weakness, posting negative year-over-year results for the week ending September 27, 2025, according to new data from CoStar Group. While the Rosh Hashanah holiday on September 23–24 partially affected travel patterns, overall performance trends remain subdued compared to 2024.
STR, a division of CoStar, reported that national occupancy fell to 65.6 percent, down 4.2 percent from the same week last year. The average daily rate (ADR) also declined by 2.5 percent, to $166.48, reflecting lower room demand and softening pricing power across multiple markets.
The most significant declines among the top 25 U.S. markets were recorded in Las Vegas and New Orleans. Las Vegas saw occupancy drop 23.0 percent to 66.1 percent, with rates down 20.1 percent to $195.31, largely due to reduced group and convention business following a strong summer. New Orleans experienced a 21.1 percent decline in occupancy to 48.4 percent and a 14.9 percent decrease in rates to $131.54, reflecting weaker demand outside of major event periods.
In CoStar’s latest industry podcast, analysts noted that August 2025 performance data was similarly disappointing, as ADR growth trailed inflation for the first time in months—an indication that hotel pricing strength is eroding.
“Yes, the U.S. economy is bumpy up and down the food chain, and you have tariff impacts, tax cut effects, and immigration discussions,” said Jan Freitag, National Director for Hospitality Analytics at CoStar Group. “But the bottom line is continued growth in the American economy. And yet, when we look at our data, we’re asking, ‘Growth? What growth?’ It seems like we’re a little disconnected from the macro environment when we focus on our microcosm of hotels.”
CoStar’s year-to-date data shows ADR growth of just 1.0 percent, lagging behind inflation and signaling limited profitability for many operators. With muted demand growth, soft corporate travel, and economic uncertainty, the outlook for the remainder of the year remains cautious.
Industry analysts warn that the coming months could see additional challenges, including potential disruptions from hurricanes and seasonal slowdowns, putting further pressure on occupancy and rate recovery heading into the winter travel season.
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