Manhattan Lodging Index: Q4 2024

According to data from STR, the U.S. hospitality sector experienced moderate RevPAR growth of 1.8% in 2024, primarily driven by an increase in ADR, while occupancy levels remained largely stagnant. A key trend underlying this data is the bifurcation in performance, with higher-end hotels significantly outperforming their lower-end counterparts. Luxury and upper-upscale hotels have benefited from recent stock market gains, which have bolstered wealth creation among their core clientele. In contrast, the lower-end market has faced challenges, including inflationary pressures and competition from short-term rentals.

The hospitality industry is undergoing a transformative shift as companies redefine traditional business models. Moving beyond the conventional focus of “heads in beds,” hospitality companies are expanding into adjacent sectors, including branded residences, wellness experiences, mixed-use developments, and alternative accommodations. This evolution reflects not only changing consumer preferences, particularly in the luxury segment, where travelers seek more immersive and personalized experiences, but also increased focus on growth driven by the need to adapt to emerging macro trends.

The integration of artificial intelligence (AI) has also become a significant trend within the industry, enhancing operational efficiencies across dynamic pricing, guest personalization, and predictive maintenance. While mobile check-in services and AI-powered chatbots are among the most widely adopted applications, the potential for broader AI implementation remains largely untapped.

The U.S. hospitality industry is expected to experience muted RevPAR growth, driven by slight ADR increases amid stable demand. However, industry sentiment suggests that transaction volume will experience a significant uptick in 2025, fueled by anticipated interest rate cuts and greater post-election economic clarity. According to CBRE, 94% of U.S. hotel investors are expected to maintain or increase their hotel investments in 2025, with central business districts (CBDs) and resort locations emerging as the most attractive investment opportunities.

As the industry navigates the evolving consumer and technological landscape, adapting to shifting consumer expectations and leveraging AI will be paramount. Modern travelers are increasingly seeking a seamless blend of work, leisure, and wellness. Hotels that offer premium experiences, such as co-working lounges and health-conscious dining options, are poised to strongly position themselves in this landscape. Furthermore, the adoption of AI-driven solutions in revenue management and customer engagement will likely become a key differentiator for hospitality companies.