U.S. hotel market shows mixed results as occupancy and average daily rate trends differ

Article originally posted on CoStar on September 23, 2025

The Empire State Building and Madison Square Garden seen from Midtown South, New York City. (Franklin Abreu/CoStar)<br/>

Through July 2025, the U.S. hospitality sector is defined by pronounced divergence in market performance. Out of 172 markets tracked by STR, 87 have posted year-over-year declines in occupancy, highlighting a landscape where larger U.S. economic volatility and local dynamics are shaping outcomes more than ever.

Across the 172 U.S. hospitality markets tracked by STR, average year-over-year occupancy remains virtually unchanged at just 0.1% growth. Yet this headline figure masks a wide range of local market dynamics. While many of the top-performing areas are smaller metropolitans, several major areas, most notably New York City, are delivering above-average results.

In contrast, some regions are experiencing steep declines, including Memphis, Tennessee -7.5%; Little Rock, Arkansas, -7.2%; and the Kentucky area, -6.4%. These divergent trends underscore the sector’s complexity and reinforce the importance of analyzing performance at the local level.

A deeper look reveals further layers of variation. Only 10% of all markets saw higher occupancy but declining average daily rate, while 16% are down in occupancy and rate. Meanwhile, 35% of markets are experiencing higher ADR growth over occupancy, and 40% saw both occupancy and ADR go up. These figures reflect the diversity of demand drivers, supply changes and rate strategies nationwide.

Among the leaders in occupancy growth over the past 12 months were Augusta, Georgia, which increased by 11.8%; Columbia, Washington, up 9.5%; and Jackson, Mississippi, rising 9.0%.

On the ADR front, the average change across all markets was 1.4%.

The top five markets for ADR growth in July included Augusta, which was up 10%; Greenville-Spartanburg, South Carolina, which increased by 9%; and Chicago, which increased by 6%. These outperformers demonstrate how local factors and market positioning can drive results that diverge from broader trends.

The top five largest U.S. markets by population further illustrate the spectrum of performance:

  • New York City posted occupancy growth of 1.2% and ADR growth of 5.5%, placing it in both the occupancy and ADR growth categories.
  • Los Angeles saw occupancy rise by 1.3%, but ADR decline by 0.2%, making it one of the few major markets with higher occupancy and declining ADR.
  • Chicago recorded occupancy growth of 3.7% and ADR growth of 6.3%, also landing in both the occupancy and ADR growth groups.
  • Houston posted a modest decline of 0.4% occupancy growth and an increase of 4.4% in ADR.
  • Phoenix saw occupancy decline by 2.6% and ADR rise by 0.6%.

While over half of U.S. hospitality markets are experiencing occupancy declines, the underlying story is one of complexity and variation. The data points to a sector where local qualitative and quantitative factors, demand patterns and rate strategies drive a wide range of outcomes, and where each market’s position on the spectrum is shaped by a unique set of influences.
Macroeconomic forces further affect these trends: International travel to and from the U.S. remains subdued, influenced by shifting global sentiment, tariffs and evolving policy decisions. Inflation and rising costs continue to pressure travelers and operators, amplifying price sensitivity and prompting more cautious spending. As consumers weigh affordability and value, booking behaviors and destination choices shift, creating a hospitality landscape where each market responds differently to challenges and opportunities.

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