HotelData.com‘s report, Q4 2025: The Profit Squeeze That Followed Peak Season, found that U.S. hotel performance softened in the second half of 2025, as demand normalized and ancillary spend came under pressure. The report tracked ADR, RevPAR, TrevPAR, and profitability trends of hotels in the U.S.
The data showed a clear shift from peak-season strength to a more selective demand environment, with implications for both topline revenue and total revenue per available room.
Q4 Steps Down From Q3
The fourth quarter marked a decisive slowdown compared to Q3.
ADR declined from $181.52 in the third quarter of 2025 to $179.96 in the fourth quarter, a 0.9 percent decrease. RevPAR fell more sharply, dropping 9.6 percent from $123.77 to $111.87.
The gap between ADR and RevPAR showed that rates held relatively steady, but occupancy and mix softened. Hotels were able to defend pricing, yet lower demand drove a disproportionate decline in RevPAR.
According to the report, this pattern reflected a market that shifted from “holding rate” to “protecting profit.” While Q3 benefited from stronger seasonal demand, Q4 revealed a more cautious travel environment.
Full-Year 2025: Rate and Revenue Decline Year Over Year
While Q4 showed a sequential slowdown, the year-over-year comparison provides a broader context.
For the full year 2025, ADR declined 2.5 percent, from $185.48 in 2024 to $180.92 in 2025. RevPAR fell 6.3 percent, from $126.18 to $118.26.
The report noted that summer 2025 did not command the same rates as in the prior year, contributing to the decline in ADR. Seasonal demand influenced performance patterns, with fall benefiting from the return of schools and college sports travel. January and February tracked slightly ahead of 2024 levels, but revenue remained behind 2024 figures across the full 12 months.
RevPAR followed a similar trajectory, with a summer slump and continued year-over-year softness. The data pointed to occupancy and demand mix, rather than aggressive rate discounting, as the primary drivers of revenue pressure.
TrevPAR Signals Consumer Selectivity
Beyond room revenue, the report highlighted a meaningful decline in total revenue per available room (TrevPAR).
Across all hotels, TrevPAR decreased 8.8 percent year over year, from $165.95 in 2024 to $151.34 in 2025.
This drop suggests that ancillary spend per occupied room softened as consumers became more selective. The report indicated that economic pressures likely influenced guest behavior, while some hotels prioritized defending rate over driving volume.
The TrevPAR trend reinforces the broader narrative of 2025: topline growth proved more difficult to sustain, particularly in discretionary spend categories such as food and beverage, events, parking, and resort fees.
However, performance varied by chain scale.
Luxury and independent properties leaned into ancillary revenue streams to bolster income. Higher-end hotels benefited from guests who continued to spend on premium experiences and add-ons. In contrast, economy and parts of midscale faced a more price-sensitive consumer, who shortened stays, shopped more aggressively, and resisted incremental spend.
The report framed this divergence within a “K-shaped” demand environment, in which affluent travelers sustain discretionary spending while middle-income consumers face affordability pressures.
Budget Assumptions Outpaced Reality
The data also found a gap between expectations and outcomes. For 2025, the budgeted ADR was $188.08, compared with an actual ADR of $180.92, representing a 3.8 percent shortfall. Budgeted RevPAR was $124.52, while actual RevPAR came in at $118.26, a 5.0 percent difference.
The divergence widened beginning in March and was most pronounced during the summer months. July and August recorded the largest gaps between budget and actual ADR, with rates more than $10 below plan.
RevPAR performed slightly above budget in January and February, but the gap between expectation and performance expanded through the middle of the year. By Q4, the gap had narrowed, suggesting that operators had adjusted their strategy as conditions evolved.
Regional Patterns Reinforce the Split
Regional performance further illustrates uneven demand conditions. RevPAR strength concentrated in the Northeast and, for much of the year, the West. The Midwest and South spent most months below the all-property median benchmark of $122.89.
At the state level, the median RevPAR benchmark was $105.23. Coastal and high-demand leisure markets, including the Northeast corridor, New England, Hawaii, California, Colorado, and Wyoming, ran above the median more consistently. Much of the Plains and the South remained below the median for most of 2025.
The concentration of above-median performance in tourism-driven and high-demand markets indicated stronger pricing power and premium mix in those locations. States dependent on occupancy-driven demand faced tighter RevPAR ceilings.
Key Takeaways
The HotelData.com report concluded that Q4 2025 did more than mark a seasonal slowdown. It validated a structural shift. Inflation cooled into early 2026, but affordability pressures remained. Higher borrowing costs continued to shape consumer behavior and business investment. Within this backdrop, demand bifurcated.
Affluent travelers continued to book and spend. Budget-sensitive travelers traded down, shortened stays, or delayed trips. This dynamic influenced ADR stability, RevPAR softness, and TrevPAR decline. The result is a two-speed market, in which rate defense alone cannot offset demand variability and ancillary revenue cannot be assumed.
For operators, the data suggested that forecasting must account for occupancy realism, wallet segmentation, and greater variability in discretionary spend.
