Hotel Trends Overview July 2026

State of the Industry Report
Alexandre Sinclair, Director of Revenue Strategy and Commercial Analytics

Hotel Trends Overview July 2026

The 2026 U.S. economic and hospitality outlook projects resilient travel demand and a significant 2.9% recovery in RevPAR growth despite strains on consumer purchasing power and low sentiment. While macroeconomic factors indicate slowing GDP growth and inflationary pressures, the lodging sector is experiencing a broad-based recovery, accelerated by artificial intelligence in booking and operations and by a shift toward domestic travel.

U.S. Market Outlook 2026

• Economic Growth: Expanding despite supply shocks, with upside potential tied to the Strait of Hormuz agreement. GDP growth is projected at 2.1% in 2026 and 1.9% for 2027–2028.
• Labor Market: Firmed with accelerating payrolls and a steady 4.3% unemployment rate. Unemployment is expected to rise later this year as growth slows.
• Inflation: Headline CPI rose to 4.2% in May due to energy costs, while core CPI held at 2.9%. Inflation is projected to peak this quarter and ease.
• Monetary Policy: FOMC held rates at 3.50%–3.75% in June and removed its easing bias. Rates are expected to hold steady this year, though risks tilt toward future hikes.
• Central Risk: A breakdown of the Strait of Hormuz reopening could disrupt global supply chains (oil, tech, fertilizers) and severely impact purchasing power.

U.S. Market Outlook 2026: Private Domestic Demand

• Consumption Pace: Decelerated to a 1.6% annualized rate in Q1 (the slowest since early 2025), with services rising 2.4% and goods edging down 0.1%.
• Income Trends: Real disposable income growth is flat to negative, as nominal gains are eroded by energy-driven inflation.
• Spending Drivers: Consumption is unsustainably fueled by a falling saving rate, increased credit use, and wealth effects concentrated among high-income households.
• Housing Downcycle: Residential investment fell for a fifth straight quarter (down 6.3% annualized in Q1) as elevated mortgage rates suppressed single-family construction and broker commissions.
• Outlook: Consumption is expected to continue growing, but only at a modest pace as inflation strains purchasing power.

Summer 2026 travel preview: Cost concerns meet intentional trip planning

• Mixed Summer Demand: While 70% of Americans plan to travel this summer, according to Allianz, Deloitte reported that only 45% plan to use paid lodging—the lowest figure in six years.
• Cost-Cutting Strategies: In response to rising costs, 38% of consumers are choosing cheaper alternatives or shorter trips, while others are cutting back on daily expenses like dining out to afford vacations.
• Shift to Domestic Travel: More Americans are staying stateside to hedge against inflation; international vacation plans dropped to 21% this summer, down from 28% in 2025.

U.S. Lodging Demand Forecast & Air Passenger Trends

• Inbound Travel Slowdown: International arrivals to the U.S. fell 2.5% in 2025 and decreased another 3.5% year-to-date as of April, driven by political rhetoric around tariffs, immigration, and geopolitics.
• Market & Event Impact: The slowdown is most concentrated in border and coastal markets, though international visits could see a temporary early summer lift from the 2026 FIFA World Cup.
• Lodging Growth Forecast: Lodging demand in the top 50 U.S. markets is projected to grow 1.3% in 2026—falling below the 2.0% historical average—before returning to its long-term trend by 2027.
• Resilient Air Travel: Air travel demand remains durable, with TSA throughput rising month-over-month in Q1 despite workforce disruptions and delays, following a strong 2025 that averaged 6.8% above 2019 levels.
• Volume Outlook: While rising fuel costs could potentially moderate passenger demand, overall air travel volumes remain on track for another year of gains.