During the third quarter, U.S. hotels demonstrated robust performance, with revenue per available room climbing by 7%, driven by increased occupancy rates, stronger demand, and higher average daily rates, as reported by CBRE.
RevPAR Growth Across Major Chains
Occupancy rates rose by nearly 2%, while room demand increased by 3% and average daily rates grew by over 4%. Pebblebrook Hotel Trust recorded an 8.3% year-over-year rise in RevPAR and a 7% increase in average daily rates for the quarter.
The luxury hotel REIT adjusted its RevPAR forecast upward by 175 basis points, setting the midpoint of its outlook to a range of 5.5% to 6%. During an earnings call, Pebblebrook CEO Jon E. Bortz stated that the industry is entering a multiyear period of growth.
Other leading hotel chains also experienced significant RevPAR increases. Hyatt Hotels saw RevPAR rise by more than 8% in the U.S., while Marriott International and Hilton both reported growth exceeding 7%. IHG Hotels & Resorts and Wyndham Hotels achieved RevPAR gains of 6% or more, and Choice Hotels posted a more modest 3.8% increase.
Factors Behind the Growth
The recovery was supported by weaker performance in the same period of 2025, when RevPAR declined in the final three quarters following tariff announcements. This year, RevPAR growth has strengthened each quarter, according to Jan Freitag, national director of hospitality analytics at CoStar Group.
Hotel operators raised rates due to sustained midweek corporate travel, a rebound in group demand, and continued spending by higher-income leisure travelers. September stood out as the strongest month, with RevPAR up 11% and both occupancy and average daily rates increasing by more than 5%.
Major events, such as the World Cup, contributed to the year’s momentum, although RevPAR growth was already above 4% before the tournament began. The event’s impact was most significant in July. Suraj Bhakta, CEO of NewGen Advisory, described it as “The World Cup was a good, strong dose of caffeine in one given month.”
A favorable holiday calendar, with Independence Day and Yom Kippur falling on weekends, also played a role. However, Freitag noted that growth in both weekend and weekday occupancies indicates underlying demand beyond these events.
Luxury Segment and Supply Constraints
Luxury and upper-upscale hotels sold nearly 2 million more group rooms and approximately 4 million more individual bookings compared to the same period in 2025. RevPAR in the luxury segment increased by over 9% through August and surged to 13% in September.
Limited supply growth, remaining below 1%, further supported higher RevPAR and average daily rates. Bhakta does not anticipate supply growth to recover next year, as construction costs and capital expenses have not decreased enough to encourage new development.
This positive trend is expected to help the industry finish 2026 strongly. Analysts predict it will surpass the 1% RevPAR decline recorded in the fourth quarter of the previous year. Forward bookings are slightly ahead of where they were a year ago, suggesting the industry will also outperform CoStar’s full-year growth forecast of 4.4%, Freitag said.
Profit Pressure and Future Outlook
Despite RevPAR gains, profits did not see a corresponding increase due to rising labor and operating costs. Hotel wage growth rose by nearly 5% year-over-year in the third quarter, outpacing both the national average and inflation rates.
Hyatt Hotels reported a 1.4% increase in adjusted EBITDA to $295 million in Q3, but revenue declined by 2.4% to $1.7 billion. Freitag noted that profit growth is concentrated in the luxury segment. Gross operating profit increased by 7.2% for luxury properties and 4.9% for upper-upscale hotels, but only by 1.2% for the rest of the sector.
CoStar forecasts national gross operating profit per available room to grow by 4% in 2026, slowing to just over 1% next year. Adjusted for inflation, this metric remains approximately 16% below 2019 levels. Bhakta predicts the hospitality industry could see another solid year in 2027, but it will be hard to show the same kind of RevPAR growth because of the high peak hotels hit this year, “It’ll temper a little bit, but it’ll still be good,” Bhakta said, predicting 2% to 3% RevPAR growth next year.
