The Largest Hotel Companies Are Preparing For A U.S. Downturn

Hotels have begun to experience a downturn in U.S. demand over the past few months, and they expect it to continue through this year. 

Though the hospitality sector had an average first quarter, sentiment across the industry is that a downward-trending economy and increasing uncertainty are set to impact their bottom lines for the rest of 2025.

“As we sit here right now, the near term is definitely disrupted,” Hyatt President Mark Hoplamazian said on the company's earnings call this month. 

In times of economic upheaval, the hospitality industry feels the impact faster than other real estate sectors as its customers make day-by-day commitments and often use discretionary spending.  

Every large publicly traded hotel company that provides forward-looking projections lowered their full-year outlooks for the key metric of revenue per available room, Michael Bellisario, a senior research analyst for Baird who covers the hotel sector, told Bisnow. 

All but two of the REITs, Host Hotels & Resorts and Ryman Hospitality Properties, also reduced their guidance for earnings, reflecting lower-than-expected profits. The five brand operators, including Marriott, Hyatt and Hilton, lowered their revenue and earnings outlooks.

“It goes to show you how broad-based the impact has been, and where the level of uncertainty is,” Bellisario said of the guidance cuts, adding that economic shocks often lead to growth slowdowns in the hotel sector.

In March, for the first time since February 2021, there were fewer people traveling by air in the U.S. than the year prior, according to Transportation Security Administration data in CBRE’s Q1 hotel report.

March saw an 11.6% year-over-year dip in international travel to the U.S., according to the report. 

Arlo Hotels President Jimmy Suh called international travel “a main concern” at Bisnow's Mid-Atlantic hospitality event last week.

Consumer confidence fell to a nearly five-year low in April, and short-term expectations on income, business conditions and the job market were at the lowest level since 2011. 

Inflation, though abating from its peak in the summer of 2022, is still above the Federal Reserve’s 2% target. And Trump administration tariffs are increasing the cost of goods from overseas. 

All of this has contributed to would-be leisure and business travelers watching and waiting to see how the economy shakes out.

The phrase “macroeconomic uncertainty” was echoed by executives on at least a dozen hotel earnings calls over the past few weeks. They projected softer demand for the rest of 2025 than they had at the beginning of the year.

“The hotel industry is very macroeconomically sensitive and very sensitive to the travel patterns across the globe, and so oftentimes what is impacting one large company is impacting another,” CBRE Head of Hotels Research and Data Analytics Rachael Rothman told Bisnow.  

Those macroeconomic concerns were evident across earnings calls as executives pointed to softer booking demand.

Pebblebrook CEO Jon Bortz said it lowered its Q2 expectations as a result of government-related travel and international inbound travel. But for the second half of the year, the decline in expectations is due to the “increased uncertainty that we're seeing in the economy and with government policies.” 

Hyatt’s Hoplamazian said in the company’s earnings report that its revised outlook is a result of “recent shifts in booking behavior — particularly in shorter-term demand.” 

He said leisure demand is “much weaker” at the hotel’s U.S. resorts than in other parts of the Americas region like Mexico and the Caribbean.

For the guests who are booking hotels, they are doing so increasingly closer to their stays. 

RLJ Lodging Trust CEO Leslie Hale said that historically, about 51% of its hotel customers booked between zero and seven days out. That percentage has now risen to 58%, she said, given the “increase in uncertainty.”

“Across all segments, our booking windows have shortened meaningfully as travelers digest this unpredictable environment.” 

At hotels owned by Summit Hotel Properties, about 60% of guests are booking within two weeks of their stay. Executives of Host Hotels & Resorts, Hyatt, Choice Hotels and DiamondRock Hospitality Co. also said that windows are shortening on their calls.

“Folks are certainly taking a pause, and I would say specifically it's government groups, which is not a surprise, and associations,” Host Hotels Chief Financial Officer Sourav Ghosh said. “That's where we're seeing a sort of moderation of lead volumes, but it's really a 2025 phenomenon.”

Those government groups aren’t only waiting longer to book. They’re also booking less frequently and canceling reservations as the Trump administration's budget cuts ripple through the public and private sectors.

Host saw a 5% decrease in business travel room bookings, and Ghosh said just over 50% was driven by government.

Ryman Chief Operating Officer Patrick Chaffin said the company’s cancellations this year have been “dominated” by government groups.

Pebblebrook, RLJ, Hyatt and Marriott also noted the government impact, whether on demand or forward-looking guidance.

Hotel companies bracing to take in less revenue for the year are looking to cut costs. 

RLJ Chief Financial Officer Sean Mahoney said on the company earnings call the REIT is pursuing “incremental cost containment initiatives” in response to economic uncertainty. 

Marriott International Chief Financial Officer Leeny Oberg said on the brand giant's earnings call that its general and administrative expenses this year are expected to decline by 8% to 10% due to an “enterprise-wide initiative to enhance our effectiveness and efficiency.” 

Arlo Hotels' Suh said the brand operator is careful not to cut revenue-producing costs during a time when customer-attraction efforts are more critical than ever. Instead, he said, the hotel brand is trying to save on things like supplies.

And in an ironic twist, he said hotel companies themselves are looking at saving on their own corporate travel costs. 

“When I went to all the major departments and said, ‘Hey, look, let's come up with a contingency plan, let's look at some of our spends and seeing where you could potentially cut back,’ the irony of all of that is that trade shows and travels were one of the first areas that we decided to look at,” he said.

“After the meeting, I said, ‘Oh, my god, we're contributing to the downturn in travel.’”