Policy Turbulence Weighs on U.S. Hotels

Federal funding shifts, an escalating trade war and heightened border restrictions have combined to dampen U.S. hotel performance in recent months, according to “Navigation Market Turbulence: The Impact of Federal Policy Changes on U.S. Hotel Performance and Demand Outlook.” The report analyzes data from more than 35,000 properties across 334 markets from January 2024 through early April 2025, plus 30-day forward bookings as of April 4.

The findings reveal that 53 percent of U.S. hotel markets recorded year-to-date declines in performance, with some markets falling as much as 22 percent below last year’s levels. The remaining 47 percent either held steady or showed modest gains, highlighting uneven recovery trends. Overall, total room-night volume slipped by one percent versus 2024, and future reservations trailed by four percent.

Just months ago, the National Travel and Tourism Office projected a 6.5 percent rise in total visitation, nearly matching pre-pandemic levels. That outlook now appears overly optimistic. In particular, government-per-diem transient bookings have plummeted nine percent, with future government bookings down a staggering 20 percent. Seventy-six percent of U.S. markets are reporting declines in federal traveler volume, and Washington, D.C., has seen a 20 percent drop in current bookings alongside a 44 percent slump in forward reservations.

Industry experts warn that federal policy is reshaping travel in ways that directly impact hotel profitability. Cindy Estis Green, co-founder and CEO of Kalibri Labs, notes that economic uncertainty typically suppresses travel growth and that the duration of this disruption remains unclear. “To navigate this evolving landscape, commercial teams need a granular, real-time view of demand,” she says. “Precision—not broad targeting—will define the winners in today’s hospitality market.”

Tourism officials in Hawaii are likewise concerned. Canadians, the largest international source market for the United States, have canceled trips amid the trade dispute and inflammatory remarks about Canadian sovereignty. New data from the International Trade Administration shows a sharp 11 percent drop in overall international arrivals in March, with Canadian visits down 12.5 percent year-over-year.

The report underscores the importance of nimble revenue management and targeted marketing strategies. Hotels in markets heavily reliant on government or Canadian travelers must adapt their distribution and pricing tactics to capture domestic leisure demand. Midscale and upscale operators with diverse customer bases may be better positioned to weather policy-driven headwinds.

Despite the challenges, some markets continue to see pockets of resilience, particularly in resort destinations and smaller secondary cities that benefit from road-trip traffic and staycation trends. Business travel demand remains sluggish, but domestic leisure segments are showing signs of recovery as consumers seek shorter, more affordable getaways.

Looking ahead, industry leaders emphasize the need for collaboration between hoteliers, travel advisors and local governments to restore confidence. Public-private partnerships that promote safe, value-driven travel experiences could help offset policy-related declines. As consumers and corporations reassess travel budgets, the hotels that deliver precise, personalized offers and maintain operational agility will be best positioned for long-term success.

In an era of “market turbulence,” the short-term choices hotel operators make—around staffing, capital expenditures and distribution—could have lasting repercussions for profitability. By leveraging real-time data and refining demand forecasts, hotels can more effectively navigate policy shifts, rebuild occupancy and reclaim growth in a rapidly changing economic environment.

Related News : https://airguide.info/category/hotel