The Gap Between Outbound and Inbound Visitation Widens & CBRE U.S. Hotels State of the Union June 2025 Edition

Key Takeaways:

• Economy

  Negative revision post forecast release poses risks to outlook.
  Both 2025 and 2026 growth expectations were cut roughly half a percent, and CPI is expected to be higher for longer. Risks to topline and higher costs make profit declines more likely.

  Employment growth continues to support travel demand.
  April employment increased 1.5% and wage increases remained above inflation at 3.8%. On the other hand, unemployment ticked up to 4.2% and the number of job openings available per job seeker continues to slow. Net, net, there should be sufficient support for a steady summer travel season.

  CMBS rates continue to pull back, declining 100 bps year-over-year.
  Rates benefited from narrower spreads and declines in the 10-year. Lower rates lead to a more than 50% increase in the number of loans issued, but the average loan size continues to decline, suggesting its smaller deals that are getting done.

• Current Trends

  Adjusting for Easter, RevPAR rose 0.4% in March/April combined.
  During March/April combined, ADR growth of 1.5% was offset by a 1.1% decrease in occupancy. While trends are softening across the board, upper price hotels outperformed, posting RevPAR growth of 2.9% over the period. Roughly 50% of markets are experiencing RevPAR increases and 50% experienced contraction over the March/April period.

  Short-term rental demand grew 6.0% in April again outpacing hotel demand.
  STRs continued to take share from hotels, with STR demand growing 6.0% compared with a 0.1% increase in hotel demand. STR share of demand increased again in April to 13.7% though down slightly from 14.2% in April 2020. STR RevPAR increased 12.7% in April as ADR rose to 142% of 2019 and occupancy improved to 97% of 2019.

  The Easter shift from March to April drove total revenue growth of 2.9% in March.
  Increased business travel because of the shift in Easter drove healthy top line growth in March resulting in a 1.4% increase in GOP dollars. Expense growth has started to moderate, particularly insurance costs; however, on a TTM basis, margins contracted 0.1 p.p. Margins are likely to continue to be pressured going forward as costs increases persistently outpace revenue growth.

• Food for Thought

  Increases in saving and discretionary income could support travel demand.
  Easing inflation and steady wage growth are boosting year-over-year growth in disposable income and savings up 2.9% and 4.9%, respectively in April. These gains along with the bounce back in consumer confidence and improvements in the performance of the S&P could provide a tailwind for summer travel.

  The gap between outbound and inbound visitation continued to widen.
  Despite the weaker dollar, outbound international travel rose 5.2% in March/April while inbound decreased 1.6%. Recent trends on both the East and West coast have remained relatively steady but are still well below 2019 levels.

  TSA throughput declined substantially in May, down 1.7%.
  For the first time since pre-pandemic, TSA throughput was down materially in May. Despite lower airfares and more discretionary income, RevPAR growth continues to be muted while decreasing Google search trends for corporate and redemption travel could be an indicator of slowing travel demand in the back half of 2025.

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