The travel industry is still riding a wave of high demand, but the game is changing. Tourists aren’t just eager to go places anymore. They are keeping a close eye on their wallets. For hotel investors, this shift in mindset is creating new rules for how to win or lose in 2025.
Sure! People are still booking trips. But now they want their money to stretch further. That means hotels can’t rely on high prices alone to boost revenue. Offering more for less, or at least making it feel that way, is becoming the key to survival and growth.
Travel Demand is Up, but Spending is Tight
Leisure travel is holding strong. In fact, recent data from Tourism Economics shows 67% of people still plan to take leisure trips. The travel itch hasn’t faded, and for many, vacation remains a non-negotiable.
So, the demand is solid, but returns won’t come easy!
Inflation may be cooling off, but uncertainty isn’t. Global economies are still shaky, and conflicts around the world continue to make headlines. That kind of turbulence messes with confidence, and cautious travelers mean cautious spending.
This affects hotel investments directly. If room rates rise but guest budgets shrink, something has got to give. Properties that don’t match the price with perceived value may see guests walk or stay somewhere cheaper. Occupancy slips, and so do profits.
Smart Pricing Beats Luxury for Growth
The middle class in emerging markets is growing, and so is hotel development. More people are traveling, especially for leisure. That should be great news for the hotel sector. But it also means competition is heating up fast.
Travelers now have endless choices. So, they are getting pickier. They want good service at fair prices, and they are quick to compare. Hotels that can deliver both are getting more attention from investors looking for long-term gains. The rest are risk-fading into the background.
Hotels that get this right with clean, comfortable, efficient, and priced smart are positioned to win. They might not have the biggest lobbies, but they are full most nights.
Hotel Markets Around the World Tell Different Stories
Now, let’s zoom out. The global hotel scene is not one-size-fits-all. In 2025, performance is all over the map. Some regions are flying, others are flatlining. Investors need to think local before they go global.
Take the United States. It is cooling off. CBRE just revised its forecast for RevPAR growth to a mere 0.1%. That is a sharp drop. Several things are at play, a quiet hurricane season, fewer major events, more tariffs, and, of course, Airbnb and its cousins still slicing into market share.
Canada tells a different story. It is steadier, with a projected 2.4% RevPAR bump. Domestic travel is healthy, and the U.S. continues to send tourists north. Hotels there are faring better because the fundamentals, like value, access, and demand, are more balanced.
Places like Mexico, Costa Rica, Colombia, and the Dominican Republic are booming. Their appeal is strong, and so is their visitor flow. Tourism there is fast-moving, and hotels are benefitting from solid growth patterns.
Europe is holding on, but growth is slowing. International arrivals are up, but RevPAR is flattening to the 2% to 5% range. Travelers are returning, but not necessarily spending more.