Tom Kelley, President of DYA + EIS Hospitality
Change is the only constant when it comes to hotel industry trends.
This is especially true in the hospitality industry, where guest expectations change, operating costs vary, and economic pressures influence hotel operators’ strategies.
Year-to-date results show an industry balancing strong guest spending with growing construction activity and shifting competition from short-term rentals. For hotel operators, these dynamics are clear; they determine where to invest, how to allocate resources, and when to move forward with critical upgrades.
As a general contractor with decades of expertise in luxury hotel renovations, Digney York Associates (DYA) follows these trends closely. They shape how we partner with hotel operators to deliver projects supporting the guest experience and long-term asset value. Whether it’s understanding the impact of global events on demand or seeing how segment performance drives brand investment, we stay on top of hotel industry trends.
The following overview highlights the latest trends in the hotel industry shaping the remainder of 2025. It offers a perspective on where growth is occurring, where pressures remain, and how hotel operators – and the partners who serve them – might respond to a marketplace defined by continual change.
Flat Growth in US Hotel Performance
The American Hotel and Lodging Association released its State of the Hotel Industry Report, which broke down the industry’s past and present growth and predicted performance into three areas: occupancy, RevPAR (Revenue per Available Room), ADR (Average Daily Rate), and ADR (Average Daily Rate).
- Occupancy – STR estimates hotel occupancy to reach 63.38% in 2025.
- RevPAR – RevPAR will potentially hit $102.78 in 2025.
- ADR – The ADR will hit a new high of $162.15 in 2025.
Guest Spending Hits Record High
Though the rates above show struggle, there is still potential as guest spending behaviors change. Guest spending is projected to reach $777.25B, a four percent increase from 2024, driven by lodging, food, entertainment, and transportation. These statistics show growth and the hospitality industry’s critical place in stimulating local economies.
Construction Pipeline Expands
According to an STR report, after years of uncertainty, the hotel industry saw an increase in construction for seven consecutive months in 2024. The report also showed that despite high interest rates throughout the year, developers were optimistic about new projects. Investor confidence rose following the September 2024 interest rate cuts, accelerating planning and final planning activity growth.
Upscale and upper-midscale properties represented about 50 percent of rooms in the final construction phase during the first nine months of 2024, emphasizing their consistent demand. Luxury and midscale properties showed the fastest growth, up 48.5 percent and 34.5 percent, respectively, showing a desire for higher-end accommodations.
By September 2024, the pipeline had expanded to 157,253 rooms under construction, a seven percent year-over-year increase. Another 268,190 rooms were in the final planning stage, a gain of 10.4 percent, and 336,205 rooms were in the planning stage, up an impressive 38.4 percent from the prior year.
These numbers signal a renewed wave of development activity across the United States, driven by investor optimism and long-term confidence in hotel demand. All of this optimism has the potential to be cooled by the US tariff policies on furniture and fixtures, forcing hoteliers to keep a sizable procurement contingency as part of their reinvestment budgets.
Rising Costs Squeeze Margins
Despite increases in guest spending and a growing construction pipeline, operating costs, especially insurance, maintenance, and IT, are rising faster than revenue, squeezing profit margins. Per CBRE’s Trends in the Hotel Industry report, insurance costs increased by 15.3% for all hotels in the sample, while midscale and small economy hotels showed a larger increase of over 19.6%. In addition, operations and maintenance, sales and marketing, and IT costs rose by almost 5%, further putting financial pressure on hotel operations.
Sports and Entertainment Influence Consumer Interest
Entertainment events often sway pricing, occupancy, and growth in the hospitality industry, and their influence continues to increase. From legendary sensations like the Super Bowl and Taylor Swift’s Eras Tour, events are changing how guests travel and redefining how hotels engage with visitors.
Now in focus: Anticipation for FIFA 2026 (taking place in 16 cities in the US, Canada, and Mexico) and the 2028 Summer Olympics in Los Angeles.
The report states:
“The 2026 FIFA World Cup, set to generate over $5 billion in economic impact across North America, promises to be a game-changer for the hospitality sector. With FIFA projecting $11 billion in revenue for the 2023-2026 cycle, including $3.1 billion from hospitality rights and ticket sales, hotels, and event venues have a significant chance to capitalize on the world’s largest sporting event.”
The numbers are even more exponential when considering the 2028 Summer Olympics. Dodge Construction Network estimates an economic impact of $11 billion, with the event needing 40,000 hotel rooms and an Olympic Village for 15,000 contestants. This influx of visitors positions California’s hospitality industry for significant growth.
Other sports and large-scale entertainment remain key growth drivers for the industry. Concert tours, regional tournaments, and cultural festivals encourage hoteliers to expand their capacity and improve guest experiences. These factors pave the way for increased demand across multiple segments, emphasizing the importance of strategic renovation, building meaningful partnerships, and construction planning in the coming years.
A General Contractor Who Understands Hotel Industry Trends
This year-to-date performance rundown confirms one truth: change is all around us. Guest spending, construction activity, and competitive pressures will continue to shape how operators manage their assets and plans. Understanding these shifts is critical for hotel operators to decide when and how to invest.
As a general contractor with over 40 years of experience in luxury hotel renovations, Digney York Associates has observed trends rise, peak, and fade. Our ability to anticipate industry shifts, adapt our approach, and deliver projects that meet owners’ long-term goals remains steady. By being informed, we help hotel operators confidently navigate periods of uncertainty.
At Digney York Associates, we combine decades of experience with a clear understanding of the forces shaping today’s hospitality industry trends. That perspective allows us to deliver renovations that protect the guest experience while strengthening the long-term value of your asset.
ABOUT DIGNEY YORK ASSOCIATES
Digney York Associates is a hotel construction company based in Washington, D.C. They have dedicated the last 40 years to the hospitality industry, specializing in guest room renovations for luxury hotels and resorts. The company offers hotel renovation services that span from pre-construction through the construction phase of renovations, in addition to specialty services. Digney York has long-term relationships with the hospitality industry’s premier brands. They consistently deliver high-quality hospitality renovations, which increase overall property values and enhance the guest experience.