U.S. hotel performance in Q2 2025 was marked by fluctuations around key holiday periods. Occupancy declined during the Easter and Passover travel weeks, as families prioritized shorter trips, and many urban markets experienced a reduction in business travel. Another notable soft spot emerged around Memorial Day, when operators heavily discounted to stimulate bookings, briefly pushing the ADR near $150. From early June onwards, both occupancy and ADR strengthened, ending the quarter above 70% occupancy with rates stabilizing near $165. This finish signals resilient summer demand and improving group activity, even as holiday-driven dips highlighted lingering consumer caution.

Occupancy was reported at 63.80% at the start of Q2 2025, increasing to 71.90% by the end of Q2 2025. ADR was $160.18 at the beginning of Q2 2025, increasing to $163.30 by the end of Q2 2025. RevPAR was $102.21 at the start of Q2 2025, increasing to $117.45 by the end of Q2 2025.

(Source: STR)

Analytical Summary

Major Q2 2025 transactions (By Sale Price)

1. Hotel Name: JW Marriott Phoenix Desert Ridge Resort & Spa    Location: Phoenix, AZ    No. of rooms: 950    Sale Price: $755,000,000    Price per unit: $794,737 per unit    Seller: Elliot Management Corp.    Buyer: Ryman Hospitality Properties
2. Hotel Name: Kimpton Hotel Eventi     Location: New York, NY     No. of rooms: 292     Sale Price: $174,500,000     Price per unit: 597,603 per unit     Seller: DLJ Real Estate Capital     Buyer: BRE Hotels & Resorts LLC
3. Hotel Name: Viewline Resort Snowmass, Autograph     Location: Snowmass Village, CO     No. of rooms: 254     Sale Price: $144,000,000     Price per unit: $566,929 per unit     Seller: High Street Real Estate     Buyer: Elevated Returns
4. Hotel Name: Fairmont Dallas     Location: Dallas, TX     No. of rooms: 545     Sale Price: $111,000,000     Price per unit: $203,670 per unit     Seller: Xenia Hotels & Resorts, Inc.     Buyer: Sixth Street Partners, LLC

Source: CoStar

Q2 2025 Cap Rates

Average cap rates for U.S. hotels increased by 1 basis point in Q2 2025 as compared to Q1 2025. The following table illustrates minimum, maximum, and average cap rates for U.S. hotels in Q2 2025 & Q1 2025.

(Source: RealtyRates.com)

Source: RealtyRates.com

Outlook

The U.S. hotel industry is entering Q3 2025 on a cautiously positive note. High-end hotels continue to see strong demand from affluent travelers and corporate guests, while midscale and economy properties are still under pressure from softer consumer spending and fewer international visitors. Booking windows remain short, reflecting traveler caution, though group and event business is helping support occupancy in major urban centers.

On the investment side, hotel REITs and listed operators are dealing with tighter margins and modest RevPAR growth. Even so, well-located luxury and resort properties are holding value and remain attractive to investors. Cap rates are steady, but capital is moving toward quality assets in top markets, with experiential properties drawing the most attention. Overall, Q3 should deliver robust operational gains but with an uneven impact across segments—favoring those positioned at the higher end of the market.