Lodging Analytics Research & Consulting (LARC) Issues Statement on Current Economic Uncertainty and Implications on the U.S. Hotel Industry

Given the current state of U.S. economic uncertainty, LARC has issued a statement pertaining to the implications of that uncertainty on the U.S. lodging industry. You can read the full statement here, while below are some highlights.

Over the past two months, the U.S. economic outlook has degraded meaningfully and moved into a period of heightened uncertainty. That heightened uncertainty is primarily driven by the current administration’s tariffs and lack of transparency of their ultimate scale and duration. Both potential negotiations and potential retaliation could meaningfully alter the scale and duration of the current tariffs, making it incredibly hard to predict what the implications of these tariffs will be on the lodging industry, moving forward. With that said, we would be remiss if we did not point out how the macro-economic backdrop that drives lodging industry performance has been impacted in recent months.  

·    Rhetoric coming out of Washington, D.C. has included disparaging remarks about Canada and other nations, repelling foreigners.

·    President Trump’s inconsistent approach to public tariff negotiation has generated a heightened level of uncertainty.

·    The tariffs themselves have come in at elevated levels relative to expectations, and while it is unclear how long they will remain in place, the short-term economic impact is now expected to be more impactful than previously expected.

As a result of these policy dynamics, which have had greater negative impact on economic activity than our previous baseline expectations, the following have occurred:

·    Moody’s Analytics now expects 2025 GDP growth to be 1.3%, down from 2.3% in February.

·    U.S. Consumer Sentiment has declined 23% YTD (through March).

·    Through April 8, the S&P 500 index has dropped 15% YTD and 12% since April 2.

·    According to OAG, advance bookings between Canada and the U.S. have plummeted by more than 70% for the summer leisure travel season.

With that backdrop, we believe there is too much uncertainty in the macro-economic environment to issue an updated forecast for the U.S. hotel industry at present. However, given the current environment, we see far more downside risk than upside risk to our current outlook, which was released on March 1, 2025. Our next forecast update remains on schedule for the end of May and hopefully by then, we have a bit more clarity surrounding the implications of the aforementioned tariffs.

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Better Market Intelligence

LARC offers a full suite of analytics products for the hotel industry. Our work is grounded in the belief that every hotel market is somewhat unique and requires detailed understanding of the drivers of hotel performance to forecast accurately. As such, LARC offers three core products to clients:

LARC’s Market Intelligence Reports for 60+ cities around the U.S. on a quarterly basis. Market Intelligence Reports include a 30-page overview of the market and detailed, transparent and historically accurate forecasts for supply, demand, occupancy, ADR, RevPAR, wages, property taxes, Hotel EBITDA, cap rates and property values on a quarterly basis looking forward five years.  No two markets have an identical set of drivers- each market is analyzed independently of others. As such, we share the back testing of our models, the primary drivers of our models, the R-square on our models and sensitivity tables based on some of our assumptions. This transparency is appreciated by our clients and gives us instant credibility – we don’t just give our clients a forecast, we tell them how we got there and show them why they should trust it.

LARC GIS provides specific data tied to demand drivers around individual properties and aggregates it within whatever is deemed to be a hotel’s local trade area. The data-centric web-based application offers an ability to quantify location quality of a hotel like never before. The tool also offers annual RevPAR growth forecasts for over 19,000 unique geographies in the U.S. as well heat maps for RevPAR growth moving forward. 

Custom Research & Consulting Services include one-off commissioned reports on smaller markets/ submarkets/ price classes. We create custom forecasts for groups of hotels that fit a client’s need. We also offer a variety of bespoke advisory services to the hotel industry ranging from market selection to investment strategy and everything in between, all based on our analytical approach to forecasting.