US Hospitality Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

US Hospitality Market Trends and Insights

Strong Domestic Travel Demand

Domestic leisure spending remained a bright spot in 2025, with United States Travel indicating that outlays held firm as consumers prioritized trip plans and experiences despite broader cost pressures that affected discretionary budgets. Systemwide airline enplanements reached 76.8 million in September 2025, which reflects normalized travel patterns and an air demand base that helps support year-round lodging activity across primary and secondary markets.^{[1]U.S. Bureau of Transportation Statistics, “September 2025 US Airline Traffic Data,” U.S. DOT BTS, bts.gov} Security checkpoint throughput surpassed 2.8 million daily passengers at several points in early January 2026, signalling sustained momentum at the start of the year and a positive read-through for short-haul and city-weekend lodging demand within the United States hospitality market.^{[2]Transportation Security Administration, “Travel Passenger Volumes,” TSA, tsa.gov} As travel normalized, spending composition shifted more toward experiences and premium on-property offerings, which supported rate integrity in better-positioned assets that invest in wellness, dining, and cultural programming. This demand base helped stabilize the United States hospitality market through periods of economic uncertainty, with network effects from air capacity and road-trip patterns continuing to disperse travellers beyond traditional gateway hubs.

Digitalization and Online Booking

Mobile-first booking has become the prevailing workflow for hotel reservations, and hoteliers who align merchandising and UX to mobile journeys see higher conversion and better return on media spend. Direct engines benefit when loyalty rates are visible, when cart design reduces friction, and when retailing of add-ons is integrated at search and checkout, which supports a stronger direct mix in the United States hospitality market. Industry associations also point to digital drivers like personalization, first-party data capture, and optimized metasearch participation as core to sustaining owned bookings that reduce intermediary costs. As distribution stacks evolve into platform ecosystems, property teams apply layered tools for pricing, content, and retailing that integrate with PMS and CRM, which strengthens data-driven decisions across the customer journey. This digitalization trend supports the United States hospitality market by improving the economics of demand capture and by enabling targeted offers that grow revenue per guest without sacrificing rate strategy.

Short-Term Rentals and Hybrid Models

Short-term rental regulation remains active, and national policy research confirms that local restrictions, tax changes, and registration systems continue to shape market outcomes in urban and resort communities. States and municipalities also adjust fiscal policy to address whole-home rental dynamics, illustrated by Rhode Island’s new 5% whole-home STR tax effective January 1, 2026, which sits alongside local hotel taxes and broadens parity across accommodation types that compete with hotels.^{[3]Rhode Island Association of Realtors, “New Short-Term Rental Laws Going into Effect January 1,” Rhode Island Realtors, rirealtors.org} Hotels are responding through extended-stay offerings and serviced apartment formats that serve longer trips and corporate relocations, which diversifies demand and helps recapture share in categories where rentals previously had an advantage. As policy enforcement tightens in select jurisdictions, the United States hospitality market benefits from rechannelled demand during peak periods and events, especially where hotel inventory aligns with length-of-stay needs and proximity preferences for business and leisure travellers. Over the forecast period, the coexistence of STRs and hotels will continue to be shaped by compliance frameworks and traveller preferences, with hotels leveraging service consistency, loyalty value, and amenity access to compete in hybrid stay use cases.

Infrastructure and Airport Expansion

Federal programs that modernize airport terminals and related infrastructure help unlock long-run capacity, which supports room-night growth in gateway and secondary markets served by expanded air service. The Airport Terminals Program under the Infrastructure Investment and Jobs Act allocates USD 1 billion per year through 2026, with 2026 representing the final tranche for terminal upgrades and multimodal connections that ease bottlenecks.^{[4]U.S. Department of Transportation, “Airport Terminal Program,” U.S. DOT, transportation.gov} Airports Council International, North America, estimates USD 173.9 billion in infrastructure needs for 2025 to 2029, and terminal projects represent a large share of those investments that directly affect traveller experience and throughput. Construction and airfield work can temporarily constrain operations, though near-term disruptions enable longer-term gains in capacity and reliability that benefit lodging demand tied to air traffic corridors. As these projects deliver, the United States hospitality market sees stronger connectivity that lifts visitation for business, meetings, and leisure across multiple regions.

Elevated Labor Costs & Shortages in Gateway Markets

The leisure and hospitality sector continued to experience above-average unemployment rates relative to the overall economy at several points during 2025, which underscores ongoing frictions in hiring and retention across core property functions. Industry surveys point to persistent staffing shortages in hotels, with many operators citing housekeeping and guest services as the most difficult roles to fill. Wage growth and compliance complexity in high-cost cities raise operating baselines, which compress margins when room revenue growth is modest and when occupancy ebbs seasonally inside the United States hospitality market. Operators have responded with productivity improvements and targeted automation in back-of-house and guest-facing workflows, but the pace of cost relief depends on sustained gains in staffing stability and training outcomes. These labour dynamics remain most pronounced in gateway metros with higher minimum wages and scheduling requirements, which adds execution risk to independent assets with smaller teams and limited purchasing leverage.

Rising Insurance & Climate-Risk Premiums for Coastal Properties

Hotel owners report that insurance and other property-related operating expenses have risen, with coastal markets and weather-exposed regions facing the greatest pressure due to evolving risk models and carrier appetite. Broader construction and risk trends have also influenced project economics and underwriting standards in the past year, which raises diligence requirements for new-builds and complex renovations near flood or wildfire zones. Insurers continue to refine pricing in response to loss experience and forward risk assessments, and property owners often pair risk mitigation investments with adjusted deductible strategies to preserve coverage. These conditions affect valuation and financing pathways for coastal hospitality assets and increase the appeal of conversions over ground-up development in certain submarkets of the United States hospitality market. Over the long term, resilience planning and portfolio diversification remain central to managing exposure to climate-driven volatility in operating costs.

Segment Analysis

By Type: Conversion Velocity Closes Independent-Brand Gap

Independent hotels held 63.38% of the base in 2025, while chain hotels are projected to grow at 7.73% through 2031, indicating that the United States hospitality market size by brand affiliation is shifting as conversions accelerate and brand systems demonstrate stronger demand capture. Brands support owners with reservation engines, loyalty ecosystems, and sales platforms that improve exposure to high-yield segments, which encourages independent owners to consider soft-brand options that preserve identity with lower transition friction. Global operators emphasize asset-light models that favour franchise and management contracts, creating scalable networks where brand standards and procurement leverage expand profitability over time for participating properties. The extended-stay category remains a resilient bridge between hotel and rental demand, and its flexible length-of-stay mix helps stabilize occupancy during shoulder periods in the United States hospitality market. As capital remains selective, the combination of conversion-readiness and loyalty access is likely to tilt owner decisions toward brands that offer speed to revenue and balanced franchise terms.

Conversion economics benefit most where brand systems can lift visibility in corporate channels and reduce distribution costs through direct marketing at scale, which can offset franchise fees through stronger occupancy and rate. Companies that reported a high proportion of openings from conversions highlighted owner demand for flexible collections that retain local character while unlocking global demand pools. Independent operators still compete effectively where product differentiation and local partnerships generate premium ADRs, although many are adopting digital tools for pricing, CRM, and retailing to protect share within the United States hospitality market. Extended-stay brands deepen their footprint by serving project crews, relocating families, and medical travel, which diversifies the mix and reduces cyclicality for both branded and independent portfolios. In the forecast window, the gap between brand and independent growth narrows as more independents adopt soft brands and as brands refine owner economics for sub-300-room conversions in secondary and tertiary markets.

By Accommodation Class: Premium Experiences Shield Luxury from Inflation

Mid and upper-midscale properties held a 47.73% share in 2025, while luxury is projected to grow at 6.47% through 2031, showing how the United States hospitality market size spans both value-focused and premium-led demand pools that together stabilize performance across cycles. Mid-tier brands benefit from consistent business travel, road-trip stays, and family travel, where rate integrity and included amenities remain central to purchase decisions. Luxury demand is buoyed by travellers who prioritize unique experiences and wellness-oriented stays, which supports ADR premiums and targeted pipeline expansion in high-barrier destinations within the United States hospitality market. As air capacity improves and event calendars fill, upper-midscale through upper-upscale assets gain from repeat corporate and group demand, while luxury resorts benefit from longer leisure stays tied to milestone travel. This barbell demand profile helps balance market risk and underpins the long-term growth narrative across classes.

Extended-stay offerings inside the midscale and upscale tiers continue to perform as durable profit centres, and they complement traditional room demand with longer-stay revenue that stabilizes occupancy during off-peak windows. Luxury portfolios invest in curated experiences and exclusive access programming, which secures loyalty from top-spend travellers and keeps rate discipline intact even as broader market growth moderates. Mid and upper-midscale brands, meanwhile, optimize direct booking, mobile UX, and email remarketing to hold share against OTA channels and preserve contribution margins within the United States hospitality industry. Lodging choices that merge convenience with amenity value continue to win repeat business at moderate price points, which supports a balanced trajectory for the class mix. The resulting class spread gives owners multiple levers to align product with local demand and to pursue incremental ADR through upgrades and package retailing.

By Booking Channel: Direct Digital Momentum Challenges OTA Dominance

OTAs captured 38.37% of bookings in 2025, yet direct digital channels are projected to post the fastest growth at 8.26% through 2031, which indicates a decisive push by brands and independents to strengthen owned demand capture within the United States hospitality market. Direct engines that deploy dynamic offers, loyalty recognition, and frictionless checkout increase conversion rates and lift revenue retention compared with intermediary channels. Mobile design and merchandising drive disproportionate gains as travellers plan and book on smartphones in greater numbers, which makes performance marketing and metasearch strategy central to the channel mix. Voice continues to matter for higher consideration stays and complex itineraries, and teams that instrument the voice channel capture incremental bookings and upsells at attractive conversion rates. Hotels that balance OTA reach with stronger direct loyalty funnels are best positioned to improve contribution margins and reduce reliance on discount-driven placements inside the United States hospitality market.

Corporates and small groups increasingly expect self-service tools for simple meetings and short-lead events, and suppliers that enable digital RFPs and instant book for basic space and catering win a growing share of MICE demand. Direct booking benefits scale when CRM, PMS, and distribution platforms share data, which supports personalization and revenue optimization that protects rate while improving the guest journey. The United States hospitality industry is also adopting total-revenue retailing that bundles parking, late checkout, F&B credits, and experiences, which raises order value and reduces cancellation risk in direct channels. Vendors and associations highlight the importance of first-party data capture and consent frameworks that comply with privacy rules while enabling lifecycle marketing. As these practices become standard, channel profitability improves and strengthens the long-term economics of demand generation.

Note: Segment shares of all individual segments available upon report purchase

Geography Analysis

The West region led with a 29.65% share in 2025, while the Northeast is projected to deliver the fastest growth at 8.26% through 2031, which shows how regional dynamics balance rate leadership with growth pipelines across the United States hospitality market. California’s statewide lodging demand remains supported by diversified visitor flows and a strong events outlook, which helps stabilize performance as the international mix continues to recover. In Chicago, hotels set a record for summer room demand in 2025, underscoring resilient urban travel tied to conventions and leisure in a market that benefits from air hub connectivity. San Diego’s consistent convention calendar and diversified economic base supported solid occupancy in mid-2025 as hotels leveraged business travel and year-round leisure demand. These examples highlight how market positioning and air access shape city-level performance inside the United States hospitality market.

Northeast performance is buoyed by destination strength in New York and Boston, along with the institutional and medical anchors that stabilize demand through academic and healthcare calendars. As airport modernizations progress, airside and landside improvements expand throughput for large and medium hubs that feed business and leisure visitation into Northeastern corridors. In the West, coastal and tech-centric markets continue to lead on ADR, although financing conditions and operating costs temper new-supply risk, which preserves pricing power for well-located assets. The Southeast benefits from in-migration and warm-weather leisure, and select Florida markets sustain strong resort demand that supports ADR even as growth normalizes from prior peaks. Across regions, air travel strength and event calendars are pivotal to the dispersion of demand that underpins the United States hospitality market over the forecast period.