U.S. Hotels Face a Challenging Landscape This Year
The DJIA fell 299 points, the Nasdaq was down 180, the S&P 500 fell 50 points and the 10-year treasury yield was down .06 to 4.39%. Lodging stocks were modestly in negative territory on the day.
In 2025, the U.S. lodging sector faces a challenging landscape, characterized by a combination of macroeconomic and capital market factors, according to PwC. As a result of the macroeconomic headwinds, GDP in 2025 is expected to grow by 0.7%, compared to 2.5% in 2024, on a fourth-quarter over-fourth-quarter basis. Inflation is anticipated to rise 2.7% in 2025, which, coupled with geopolitical uncertainties, is expected to significantly influence consumer behavior, particularly impacting the lower-priced chain scale segments. As a result, PwC expects RevPAR growth to decelerate significantly to 0.8%. The key risks continue to be on room night demand, just as lodging supply growth is reverting to its long-term average of ~2.0%. Key demand performance trends and risks include: International leisure travel has declined noticeably, marked by a 3.3% drop in visitors in the first quarter compared to last year. In contrast, inbound corporate travel has improved, with a 10% and 17.4% increase from Europe and Canada, respectively. Domestic leisure travel growth has slowed significantly due to a combination of inflation concerns and declining consumer sentiment, while domestic corporate travel is showing mixed results, with stable premium offerings and group travel demand despite softened lower-tier demand. Hotel operating performance continues to be bifurcated, with luxury hotels outperforming economy properties. YTD through April luxury RevPAR grew by 7.1%, while economy hotels saw only a 0.9% increase, compared to the same period last year. Despite a slowdown in hotel development, upscale segments continue to see new projects. PwC's outlook anticipates significant deceleration in travel demand in Q2, with expected positive momentum recommencing in the second half of 2025. As a result, PwC expects RevPAR in the second quarter to decline by 1.2% year-over-year, driven primarily by occupancy. PwC also expects RevPAR in the third and fourth quarters to increase by 1.1% and 1.8% respectively. For 2026, global events like the FIFA World Cup could boost tourism.
HHM Hotels announced the Courtyard by Marriott Philadelphia Downtown has announced a new name following an all-encompassing property renovation that included the renovation of every guestroom and public area of the hotel. Formerly the Le Meridien Philadelphia, the 202-room hotel features an onsite restaurant and bar, 9,165 square feet of flexible event space, a fitness center, and an onsite market.
Hilton's Canopy brand has made its debut in Nashville, Tennessee. Located in the city's Gulch district, Canopy by Hilton Nashville The Gulch features 181 rooms, including 27 suites and five distinctive dining experiences.
Hotel Indigo Nashville - The Countrypolitan has completed the second phase of its multi-year transformation. This latest phase included a full renovation of all 134 guestrooms and suites, modernization of the hotel's 6,500 square feet of meeting and event space, and a new fitness center. This renovation completes The Countrypolitan's upgrade to an authentic Nashville experience.
HEI Hotels & Resorts has added Waymore's Guest House and Social Club in Nashville to its growing portfolio of upper-upscale independent boutique hotels and resorts throughout the United States. Owned by L+R Hotels, Waymore provides 93 rooms, approximately 4,200 square feet of meeting space, and two F&B outlets.
Margaritaville Hotel Kansas City, in Kansas City, Kansas, will host a ribbon cutting and preview event today. The 229-room hotel will start taking reservations on July 1. The hotel will feature an indoor pool, an outdoor resort-style pool, retail and family entertainment centers, along with a bar and grill.
The historic Casa Marina Hotel, in Jacksonville Beach, Florida, is under contract to be sold, according to News4JAX. The property has a planned renovation for 2026. It's unclear when the pending sale will be finalized.
The Avila Village Inn, in Avila Beach, California, has unveiled an expansion that blends upgraded guest amenities with thoughtfully designed new accommodations. The boutique property has added 18 brand-new rooms in the Forest Building and completed enhancements to its original 30 rooms in the Craftsman Building.
Hotel El Roblar, in Ojai, California, is reopening on June 19, according to the Ojai Valley News. Eric Good, Jeremy McBride, Warner Ebbink and Ramin Shamshiri purchased the property and transformed Hotel El Roblar to highlight its Spanish Revival and early Californian architecture while updating its bones. The revamped hotel remains an intimate property, featuring only 50 rooms. There are 31 rooms in the main house, 11 rooms are bungalows, and eight rooms are in a new building on the property called the Sycamore House. There's also a pool, gym, treatment room, and event space.
The first patients will be seen in early 2025 inside the new Sanford Orthopedic Hospital, which will open a boutique hotel inside at the same time. Located in Sioux Falls, South Dakota, the nine-story building will have 35 rooms to serve patients both before and after procedures, 12 operating rooms, and an intra-operative MRI attached directly to an OR. The building also includes the new Highpoint Hotel, a boutique hotel with high-end finishes and amenities developed and operated by Hegg Cos. The lobby is on the fourth floor, which includes a fireplace, an expanded gym, and a bar. The 56 guestrooms are on floors six and seven, while the fifth floor eventually will be built out as 19 inpatient hospital rooms. The hotel expects to start accepting reservations in mid-October and open for the first guests on January 12, 2026.
HREC Investment Advisors arranged the sale of the 149-room Sonesta Select - Kansas City Airport Tiffany Springs located in Kansas City, Missouri. The property was acquired by KMG Hotels. HREC Investment Advisors exclusively represented an affiliate of Service Properties Trust, as the seller in this transaction.
Personnel News
Noble Investment Group announced the addition of Tim Bowes and Mark Klawitter to its asset management leadership team. Bowes will help lead asset performance across Noble's upscale select-service hotel portfolio, partnering with operating teams to implement innovative strategies that unlock value. Most recently he served at Hospitality Investors Trust, a Brookfield company. Klawitter will help spearhead execution across Noble's branded long-term accommodations platform, guiding initiatives that drive revenue, profitability, and operational innovations. He most recently served at Extended Stay America.
Europe Highlights
Together with landlord Vasakronan, Scandic plans to open a modern, new 236-room hotel in downtown Uppsala, Sweden. In addition to a gym, bar, and flexible meeting facilities, the new hotel will offer a large restaurant. The property is being developed as a mixed-use building, combining both hotel and office spaces, which means that hotel guests and office tenants will share the lobby and entrance areas. Construction is scheduled to begin in the autumn of 2025, with the grand opening planned for the second quarter of 2028.
In the UK, the design overhaul of the Malmaison, on Newcastle's Quayside, will see a £3m refurbishment to revamp all of the hotel's 122 bedrooms and suites. The company had initially planned a £2m refurbishment program, but a more ambitious scheme has now been announced. The project is being phased in to minimize disruption and is expected to be completed later this year.
Hilton is planning to build a new hotel with 142 rooms in Shropshire, England. Telford & Wrekin Council has signed an agreement with Hampton by Hilton for a six-story hotel within the town's new Station Quarter. A provisional opening date of 2027 was given.
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