US HOSPITALITY REAL ESTATE SECTOR MARKET SIZE & SHARE ANALYSIS - GROWTH TRENDS AND FORECAST (2025 - 2030)

US Hospitality Real Estate Sector Market Trends and Insights

Leisure, Business, and “Bleisure” Travel Recovery Sustaining RevPAR and Occupancy in Core Markets

The convergence of leisure travel demand and the gradual recovery of corporate travel itineraries is fostering extended "bleisure" stays. These stays are diminishing the distinction between weekdays and weekends, contributing to an increase in average daily rates. In January 2025, RevPAR recorded a year-on-year growth of 4.5%. Urban room supply is anticipated to surpass suburban supply with an additional 2.8% growth. The resurgence of group business is evident in Marriott's improved food-and-beverage revenue from convention bookings. Hospitality operators who successfully attract flexible workers for mid-week stays are achieving more consistent cash flows and optimized labor scheduling. The continuation of these positive trends will depend on the pace at which global corporate travel budgets stabilize and the persistence of hybrid work models.

Strength of Select-Service and Extended-Stay Formats Underpinning Development Pipelines

Amid 10-12% construction debt costs, developers are increasingly prioritizing select-service and extended-stay hotel formats. These models require lower capital investment per key, operate with streamlined staffing structures, and deliver strong profit margins. As of early 2025, approximately 157,000 hotel rooms were under construction across the United States, with a substantial share concentrated in these segments. Marriott's USD 355 million acquisition of citizenM, along with its licensing agreement with Sonder, is set to add nearly 19,000 technologically advanced rooms, catering to the preferences of digitally oriented travelers. Sun Belt metropolitan areas, including Phoenix, Charlotte, and Nashville, continue to attract these developments due to competitive land costs and favorable demographic trends.

Data-Driven Revenue Management and Loyalty Ecosystems Enhancing Yield Optimization

Marriott Bonvoy, with its 237 million members, now contributes to over 60% of the brand's occupied room nights. These members generate detailed demand insights that drive the company's AI-powered pricing systems. Similarly, Hilton and IHG leverage comparable platforms to implement real-time rate adjustments, optimized based on competitive benchmarks and booking windows. This approach enhances revenue per available room and increases ancillary revenue streams. Personalized offers, informed by loyalty program data, foster extended customer lifecycles and reduce customer acquisition costs. These strategic advantages are likely to further strengthen the competitive position of large hotel chains over smaller independent operators. Consequently, investments in advanced technology function as both a growth enabler and a catalyst for market consolidation.

Brand Conversions and Repositioning Improving NOI and Asset Competitiveness

Capital-efficient brand transitions enable property owners to modernize aging assets, increase Average Daily Rates (ADR), and expand distribution reach, all while mitigating the risks associated with new developments. In 2024, Host Hotels & Resorts allocated USD 1.5 billion toward acquisitions, achieving a 2.1% increase in Total Revenue Per Available Room (RevPAR) following repositioning efforts. Similarly, Pebblebrook Hotel Trust concluded a USD 525 million redevelopment initiative, which upgraded lobbies, food and beverage venues, and guest technology, driving occupancy growth despite challenging macroeconomic conditions. Independent operators are increasingly adopting soft brands to integrate local distinctiveness with global reservation systems, particularly in key gateway cities where brand premiums yield significant value.

Labor Shortages and Wage Inflation Pressuring Operating Margins

Hotels are still short by about 190,000 positions compared to their 2019 headcount and are resorting to higher wages to attract talent. In 2023, the sector's average hourly wage hit USD 17.16, marking a 26.7% increase since the pandemic. This wage hike has compelled operators to boost productivity in housekeeping and adopt digital check-in processes. By 2025, total payroll expenses are set to near USD 128.47 billion, consuming a significant portion of the revenue gains from Average Daily Rate (ADR) increases. While industry groups push for larger visa quotas and more apprenticeship incentives, the persistent workforce gaps indicate that elevated compensation has become the norm. This trend is particularly straining the margins of midscale and economy segments^{[1]Andrew Hunter, “Occupational Employment and Wage Statistics—Accommodation Industry, May 2023,” U.S. Bureau of Labor Statistics, bls.gov}. 

High Construction Costs and Financing Rates Slowing New Project Starts

Spot costs for steel, labor, and building systems remain elevated, and 10-12% construction loan coupons make pro-forma returns unattractive, especially in secondary metros where ADR ceilings are lower. Some sponsors pivot to acquiring existing assets at below-replacement pricing, channeling capex into renovations rather than new flags. The supply brake supports the pricing power of incumbent assets but may restrict room availability in high-growth nodes, nudging operators to dynamic pricing strategies to balance utilization and customer satisfaction. 

Segment Analysis

By Property Type: Hotels Hold Scale Advantages Amid Rising Alternatives

In 2024, hotels held 72.2% of the U.S. hospitality real estate market, driven by strong brand equity, distribution networks, and operational efficiency. The remaining market share was split among resorts, spas, conference centers, and the "Others" category, which includes serviced apartments and boutique accommodations. The "Others" segment, growing at a 5.75% CAGR, is projected to account for 12.5% of new supply by 2030, fueled by demand for unique ambiances and flexible layouts. Major hotel chains are leasing inventory to operators like Sonder and enhancing loyalty programs to attract new customers. Traditional hotels retain pricing power, optimizing rates during peak periods to sustain revenue dominance.

Alternative accommodations are gaining traction, but hotels' pricing resilience supports cash flows. Resorts and spas benefit from wellness tourism and affluent leisure travel, with Host Hotels & Resorts investing over USD 400 million in 2025 to upgrade spa, dining, and sustainability offerings. The "Others" segment’s growth reflects a shift toward longer stays and home-like amenities, boosting mid-term rentals in urban markets. Investors monitor income volatility across segments, noting traditional hotels’ stronger weekday occupancy and serviced apartments’ consistent weekend and extended-stay performance.

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

By Type: Chain Hotels Command Share as Independents Capture Differentiated Demand

Chain Hotels secured 67.9% of 2024 value, underpinned by ubiquitous reservation platforms and the draw of massive loyalty bases. For example, Hilton’s pipeline of 510,600 rooms reflects owner confidence in brand power to accelerate ramp-up curves. Independents carved out a 5.81% CAGR outlook by leaning into localized design, culinary individuality, and direct-booking engagement to tap authenticity-seeking guests. Third-party managers and soft brands supply independents with revenue management and distribution expertise, narrowing historical capability gaps.

Chain networks harness data scale to sharpen yield strategies, extracting incremental revenue per occupied room and boosting ancillary spend through mobile upsells. That edge may widen as artificial intelligence becomes embedded in pricing, service recovery, and labor scheduling. Independents counter through hyper-local partnerships, curated spaces, and agile leadership structures able to pivot swiftly to emerging trends. Their gains are concentrated in leisure-led micro-markets and adaptive-reuse landmarks, reinforcing the richness of America’s hospitality offer while intensifying competitive differentiation.

By Asset Class: Mid-scale Stability Versus Luxury Momentum

Mid-scale assets represented 42.3% of the 2024 base and remain the bedrock of the USA hospitality real estate market share, serving business transients and cost-conscious leisure party mixes. Their historically consistent occupancy shelters cash flow, but wage pressure and limited ADR headroom could impair margin expansion. Luxury stock, though smaller, enjoys outsized upside with a 6.03% CAGR outlook as high-net-worth travelers resume long-haul itineraries and corporations reinstate premium incentive trips. Limited new luxury supply, due to sky-high build costs, elevates RevPAR potential and asset valuations for incumbent owners.

Affordable/Budget tiers struggle to pass through higher labor and utilities expenses, prompting operators to automate front-of-house processes and pare non-essential services to defend profitability. Upper-upscale and Luxury properties invest aggressively in wellness, F&B, and ESG retrofits to justify rate premiums and reinforce brand promise. The barbell dynamic, buoyant Luxury on one end and reliable Mid-scale on the other, suggests moderate erosion for full-service Upscale unless they redefine value propositions for a more polarized demand profile.

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

Geography Analysis

California generated 18.9% of the USA hospitality real estate market size in 2024, sustained by a blend of tech-driven corporate travel, global entertainment tourism, and coastal resort traffic. Limited developable land and stringent building codes suppress new supply in Los Angeles and San Diego, preserving ADR pricing power. Northern California’s rebound in business travel post-return-to-office policies strengthens weekday occupancy, though wage pressure and urban regulatory costs weigh on margins.

Florida leads future growth with a forecast 6.25% CAGR to 2030, bolstered by year-round leisure appeal, convention center expansions in Orlando and Miami, and a favorable tax climate attracting corporate meetings. Population inflow fuels domestic demand, and cruise-related pre- and post-stay nights add incremental occupancy layers. Resort acquisitions from REITs underline capital’s confidence in the Sunshine State’s secular upside^{[2]Megan Johns, “U.S. Conference Center Expansion Projects 2025,” International Association of Conference Centers, iacconline.org}.

Texas remains a cornerstone market, supported by energy, aerospace, and technology employers that anchor weekday demand in Houston, Dallas, and Austin. The state’s lighter regulatory regime and lower unionization aid profit margins, while an influx of corporate headquarters underpins a pipeline of select-service and extended-stay developments tailored to relocating staff. Austin’s events calendar, from SXSW to Formula 1, injects high-rate compression nights that boost annualized RevPAR.

New York is still an indispensable gateway as international arrivals climb toward pre-pandemic peaks. Manhattan’s prohibitive land costs and strict zoning restrain new hotel starts, conferring pricing leverage on existing stock. Yet elevated property taxes and compliance mandates tighten margins, making asset management discipline vital. Chicago, representing Illinois’ benchmark, leverages its central location and mature convention infrastructure, though it contends with winter seasonality and rising intra-Midwest competition^{[3]Anna Barker, “International Visitation Statistics 2024,” National Travel & Tourism Office, trade.gov}.

Secondary and tertiary cities collectively labeled the “Rest of US” are accruing outsized share of net new supply. Nashville, Charlotte, and Raleigh-Durham attract institutional capital with pro-business policies and cultural cachet. Lower site costs, streamlined permitting, and robust population growth grant these metros favorable development economics, allowing owners to achieve target yields even under high interest-rate conditions. This mosaic of regional demand balances the broader USA hospitality real estate market, diffusing concentration risk and widening investor optionality.