While Global Revenue Per Available Room (RevPAR) kept up its record-setting pace, growing 3.9% through the first two months of 2025, a renewed wave of uncertainty is on the horizon. Much of this stems from the U.S., the world’s largest outbound travel market post-Covid. Despite possible future travel pullback, current demand remains strong with all three regions posting growth over the year-to-date.
Future trends: Hotel brands shift strategic priorities
Short-term: Amid a challenging and high-cost construction environment, hotel brands are increasingly using their balance sheets to fuel net unit growth (NUG), a key driver of shareholder value. More brand M&A is expected to materialize throughout 2025. Third-party hotel management companies, non-traditional lodging brands, and hotels in the lifestyle sector are likely to attract the most capital.
Long-term: The global portion of branded hotels managed by third parties (i.e., franchised) increased 3.8pp in 2024 and should accelerate further in the next three-five years as most major hotel brands look to mitigate risk and fuel shareholder value. All major brands have signaled a willingness to shift management contracts into franchise agreements, which should free up capital to help facilitate transactions and increase brand-acquisition activity.
