Lodging Analytics Research & Consulting (LARC)’s 3Q-2026 U.S. Hotel Industry Outlook and Market Intelligence Reports

U.S. hotel performance in 2Q-2026 continued to exhibit strength, with RevPAR increasing 5.7%, fueled by gains in both occupancy and ADR. This improvement was driven in part by the impact from FIFA World Cup, the benefits of SALT tax relief, and soft comparisons from last year’s declines. However, this strength was realized despite the ongoing war with Iran, rising gas prices, inflation, and the impact from the Trump Administration’s uncertain tariffs.

While in 2Q-2026, Real GDP increased just 1.5%, however, in the post-pandemic era, GDP growth has proven to be a less relevant indicator of hotel performance. This dynamic is driven by three shifts since pre-pandemic periods:

• A shift in lodging demand mix away from corporate transient demand;

• Net international travel trends that are far below prepandemic levels; and,

• GDP growth is increasingly driven by investment in AI infrastructure and the high-end consumer, and less driven by traditional business investment and the middle-class consumer.

Overall, performance across the lodging industry has largely performed in line with our expectations heading into the year with one giant exception; strengthening corporate transient demand trends. While the group and leisure segments have been consistent but positive, it is the corporate transient segment that has surprised to the upside. Going into the year, we believed there was upside tied to the corporate segment, but a second government shutdown, the launch of a war with Iran, and continued uncertainty regarding tariffs caused us to curb these expectations. Despite those factors, corporate transient trends have been robust, as Corporate America seemingly decided all at once that high stock prices and heavy investment in Artificial Intelligence (AI) required them to get on the road and sell/ meet with clients and drive revenues to justify these dynamics.

As illustrated in the chart below, Weekday RevPAR growth turned meaningfully positive in February (despite the partial government shutdown) and generally accelerated through June, remaining elevated in July.

In the near-term, we expect soft comparisons to support continued strength, even with the risk of another government shutdown and lagging corporate demand surrounding the mid-term elections. However, the AI revolution may not provide a long-term tailwind to corporate transient demand trends. According to the Federal Reserve Bank of San Francisco, business spending is skewing toward investment in AI, which accounts for 60% of all business investment in 2025 and 2026, with risks that could increase in the future. Excluding projections for AI investment, business investment growth is expected to be roughly flat in 2026 and 2027. Development of data centers rarely has a sustained impact on hotel demand. As AI investment is about increasing productivity and reducing labor costs, it is possible the investment will have a negative impact on hotel revenue performance, despite the positive impact on economic growth.

Weekday (Monday-Thursday) vs. Weekend (FridaySaturday) RevPAR Growth in 2026

While weekend trends have also accelerated this year, that is more driven by soft comparisons and the high-end segments, while lower tiers have underperformed. In fact, most of households in the U.S. are struggling. Financial stress is elevated for lower-income households, with delinquencies tied to student loans, first mortgages, auto loans, and credit cards at or around post-pandemic highs.

Despite those challenges, the job market has begun to improve, averaging 125,000 jobs created from March through June. While those headline numbers are encouraging, the Healthcare sector accounted for over half of that growth and July numbers have slowed meaningfully. Healthcare workers generally do not generate hotel demand and job growth in the sector is less tied to economic growth and more tied to the aging demographics of the nation. Nonetheless, as of July, only 25% of the economists surveyed by the Wall Street Better Lodging Forecasting for Better Business Decisions Journal anticipate the U.S. to enter recession over the next twelve months. This is the lowest level since January 2025.

6-Month Cumulative Job Growth by Sector (December 2025-June 2026), Seasonally Adjusted in thousands

As a result, Consumer Sentiment has been hovering around all-time lows. In fact, the May 2026 reading of 44.8, was the lowest level in the history of the data set. While sentiment improved in June to 49.5, each of the last three months still represent the three lowest readings on record.

U.S. Consumer Sentiment Index

Despite weak consumer sentiment, the summer travel season has been robust, partly fueled by the impact of the World Cup. In June and July, U.S. RevPAR increased 8.6% year-over-year vs. 4.2% in the two months prior. The difference is primarily driven by the World Cup. Over that period, World Cup markets experienced RevPAR growth of 14.9%, with ADR up 14.6%, and occupancy up 0.3%. However, the remainder of the country has been strong as well, with occupancy up 2.4%, ADR up 4.4%, and RevPAR up 7.0% over the same period. These increases are driven by non-World Cup demand shifting away from host cities to non-host cities due to heightened hotel rates.

Overall, we estimate that the World Cup provided a tailwind for U.S. hotel performance of about $2 billion, which equates to a full-year RevPAR impact of about 100 bps (almost all ADR), which is consistent with our expectations in the months leading up to the events. However, host city performance varied, based on international leisure travel appeal, domestic leisure travel appeal, amount of hotel room inventory, attractiveness of the matches, airlift, and year-over-year comparisons.

World Cup Host City Performance during June and July 2026

Despite the positive performance driven by the World Cup, international inbound travel remains on the decline.

Rolling 3-Month YoY Change in Inbound International Travelers

While the declines moderated in recent months, July was down (3.0)% year-over year. We do not expect these dynamics to improve quickly but remain hopeful that the Better Lodging Forecasting for Better Business Decisions U.S. government will continue to calm the inflammatory rhetoric that is partly to blame for the decline in international arrivals that began when President Trump took office.

The good news is that the volume of U.S. citizens traveling abroad has begun to decline as well. July marked the fourth consecutive month of year-over-year declines in U.S. citizens traveling abroad. This shift has likely been fueled by a combination of the rising U.S. Dollar, the war with Iran and reduced discretionary income levels.

Rolling 3-Month YoY Change in Outbound U.S. Citizens Traveling Abroad

Lastly, while group trends have been strong, we expect them to slow. Based on data from roughly 30 of the largest convention centers across the U.S., convention bookings are pacing up 4% year-over-year this year, which is consistent with 2025’s year-over-year increase. However, in 2027, convention bookings are pacing flat year-over-year.

With that backdrop our outlook for U.S. hotel performance remains strong through the remainder of 2026. LARC forecasts 2026 RevPAR to increase 5.1%, driven by a 4.4% ADR increase, and a 0.7% increase in occupancy. In 2027, RevPAR will increase 2.1%, driven by a 1.2% ADR increase, and a 0.9% increase in occupancy. However, when accounting for the World Cup impact, underlying RevPAR trends are moving from +4% in 2026 to +3% in 2027. That moderation is primarily driven by slowing group trends and more difficult comparisons.

With elevated inflation and oil prices, we don’t expect the Federal Reserve Board (Fed) to cut rates any time soon. In fact, as of now, there is greater risk to the Fed raising rates than reducing them, though a dovish Fed chair may help keep the Fed sidelined.

In the short term, we expect strengthening corporate transient trends to support markets with outsized exposure to that segment. However, over the medium-to-long term, we continue to expect markets with outsized exposure to high-end leisure transient and group to outperform.

Furthermore, expense pressures will become a substantial factor in identifying markets that are winners and those that are losers, particularly with several major cities recently completing or soon to negotiate collective bargaining agreements. We expect non-union hotels to keep pace with wage growth at union properties across these markets, though many are already paying wages above union-mandated levels. Therefore, wage and expense growth and their strain on profitability materially shape our views on markets that are best and worst for investment today.

Transparency surrounding forecasting is critical to the lodging industry. LARC believes the best business decisions are based on the highest quality data and information available at the time of drawing such conclusion(s). LARC utilizes this approach with our forecasts, using the best and most relevant available information to provide the most likely outcomes at the time of issuance.

LARC’s industry-leading market intelligence is available to help all industry participants navigate the current environment and position themselves for success. Please contact us to learn more about our services and products, or if there is any other way we may be able to serve you.

Sincerely,

Ryan Meliker
President & Co-founder
Lodging Analytics Research & Consulting

Media Contact

Ryan Meliker

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