Executive Summary
The global hotel market is expected to experience growth in 2025, driven by increases in international arrivals and moderate occupancy gains. However, the industry faces headwinds from rising costs and diminishing top-line growth.
U.S. Outlook
CBRE forecasts a 2% increase in the U.S. RevPAR in 2025, largely fueled by room rate gains. Inbound international travel, airline passenger throughput, real GDP growth, and growth in discretionary income are expected to slow. Competitive encroachment from alternative lodging sources remains a concern.
Key Drivers of U.S. RevPAR Growth
- Room rate gains
- Urban locations outperform suburban and small-town locations
- Higher-priced hotels outperform in 2025
Northern Latin America Outlook
Northern Latin America (Mexico, Costa Rica, and Colombia) is expected to continue recovering from the COVID pandemic. International tourist arrivals to Mexico and Costa Rica were up 7% and 13% respectively, and Colombia welcomed 6 million international tourists.
Key Highlights of Northern Latin America Outlook
- Mexico’s average hotel occupancy rate stood at 59% through October 2024
- Colombia’s tourism sector is expected to drive hotel demand in 2025
- Costa Rica’s hotel industry has shown great resilience
Europe Outlook
The outlook for Europe’s hotel and tourism sector is mostly positive, with a more normal rate of RevPAR growth driven by intra-European and other global demand. However, geopolitical issues will remain a headwind, with some travelers limiting their visitation to Western Europe.
Key Highlights of Europe Outlook
- Europe’s total air passengers are expected to rise by 5.5% in 2025
- Growth rates for inbound overnight arrivals suggest a promising outlook
- Germany, the Netherlands, and Greece are among the top-performing countries for inbound arrivals
Middle East Outlook
The Middle East is expected to leverage the gains made in 2024, which saw major breakthroughs in tourism, aviation, and entertainment. The UAE is particularly strong due to several government initiatives.
Key Highlights of Middle East Outlook
- The UAE saw a 15.5% increase in tourism last year
- Dubai International Airport handled 92.3 million passengers in 2024
- Saudi Arabia welcomed 17.5 million international leisure visitors in 2024
Asia-Pacific Outlook
Most Asia-Pacific markets continued to recover in 2024, with total international arrivals up 31% and just 8% below 2019 levels. International visitor arrivals are expected to fully recover in 2025.
Key Highlights of Asia-Pacific Outlook
- International visitor arrivals are expected to fully recover in 2025
- Occupancy rates are expected to improve in 2025
- Destinations such as Thailand and Japan will benefit from increased mainland Chinese tourists
Average Daily Rates
Average daily rates in most Asia-Pacific markets are expected to moderate in 2025, with some markets posting strong growth.
Key Highlights of Average Daily Rates
- Japan and Indonesia posted strong ADR growth of 17% and 16%, respectively
- Thailand and Korea may see ADR growth of 10-15% in 2025
Occupancy Rates
Occupancy rates in most Asia-Pacific markets are expected to improve in 2025.
Key Highlights of Occupancy Rates
- Occupancy rates are expected to improve in 2025
- Destinations such as Thailand and Japan will benefit from increased mainland Chinese tourists
RevPAR Growth
RevPAR growth is expected to be strongest in urban locations and softest in suburban and small-town locations.
Key Highlights of RevPAR Growth
- Urban locations are expected to outperform suburban and small-town locations
- RevPAR growth is expected to be strongest in urban locations
Investment Activity
Investment activity is expected to increase in 2025, driven by a narrowing pricing gap between buyers and sellers.
Key Highlights of Investment Activity
- Investment activity is expected to increase in 2025
- The pricing gap between buyers and sellers is narrowing
- Stabilizing yields, growing confidence in total returns, and easing debt costs are laying a solid foundation for vigorous deal flow
Conclusion
The global hotel market is expected to experience growth in 2025, driven by increases in international arrivals and moderate occupancy gains. Investors should be cautious and monitor market trends closely. With a solid foundation for investment activity, there are opportunities for investors to capitalize on the growth of the global hotel market.
“The global hotel market is a dynamic and complex industry. Investors need to stay informed and adapt to changing market conditions to remain competitive. By monitoring market trends and staying ahead of the curve, investors can capitalize on the growth of the global hotel market.”
— CBRE Group, Inc.
| Region | RevPAR Growth |
|---|---|
| U.S. | 2% |
| Northern Latin America | 4-6% |
| Europe | 2-3% |
| Middle East | 5-7% |
| Asia-Pacific | 2-3% |
- RevPAR
- Revenue Per Available Room
- Occupancy Rate
- The percentage of available rooms that are occupied
- Average Daily Rate (ADR)
- The average rate charged for a room per night
CBRE Group, Inc. is a leading global commercial real estate services firm. The company provides a range of services, including hotel and lodging consulting, property management, and investment sales.
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