HVS U.S. Market Pulse Signals Cautious Hotel Rebound

As the U.S. lodging industry moves through March 2026, the latest HVS U.S. Market Pulse commentary by Rod Clough points to a cautious but measurable improvement in hotel performance, with modest revenue gains, easing distress and early signs of renewed investor activity across key markets.

RevPAR Growth Edges Higher After a Flat Start to 2026

Recent analysis from HVS indicates that the U.S. hotel sector entered 2026 on relatively steady footing, with January occupancy essentially flat compared with a year earlier but average daily rate inching higher. The firm projects nationwide revenue per available room growth of about 2.2 percent for the full year, marking a modest improvement after what analysts describe as a challenging 2025 for many operators.

Performance data compiled for early March show that momentum is beginning to build. Research from CoStar and STR for the week of March 1 to 7 highlights a 4.8 percent weekly increase in national RevPAR to roughly 105 dollars, supported by a 3.6 percent rise in average rate and occupancy at about 63 percent. These results represent the strongest weekly showing since October 2025 and extend a streak of five consecutive weeks of demand growth for U.S. hotels.

HVS commentary suggests that better year-over-year comparisons should emerge through the spring as the industry cycles past last year’s soft patches in demand. Markets that struggled with reduced government travel, delayed corporate itineraries and event cancellations in 2025 are now benefiting from more stable activity levels, helping to underpin the gradual improvement in nationwide RevPAR.

Event-Driven Markets and Diverging Regional Performance

Market-level trends reflected in the latest pulse reveal a sharply uneven recovery pattern. Las Vegas has been one of the most prominent outperformers in early March, with STR data attributing a surge in local RevPAR to a major construction trade show that drew more than 140,000 attendees. That event lifted the city’s RevPAR by more than 90 percent for the week, driven by an approximate 60 percent increase in average rate on occupancy near 85 percent, underscoring the powerful influence of large-scale conventions on urban hotel markets.

HVS points as well to continued outperformance in select coastal and gateway destinations, including Miami, where leisure and group segments have remained comparatively resilient. At the same time, several Sun Belt and government-reliant markets that saw outsized gains earlier in the cycle have cooled, with Tampa Bay, Atlanta and Washington, D.C. among the metros registering softer year-over-year results, partly reflecting a more normalized event calendar.

Outside the major metros, smaller and secondary markets are registering a mix of outcomes. Industry forecasts from brokerages and research firms note that midscale and economy hotels, particularly those in drive-to and suburban locations, continue to face more pronounced rate pressure as cost-conscious travelers trade down and new supply comes online. By contrast, certain urban cores that lagged in the initial recovery, including the San Francisco Bay Area and select Midwest cities, are now reporting double-digit RevPAR growth as business travel, group demand and special events return more fully.

Investment Market Stabilizes as Distress Clears

On the capital markets side, the HVS pulse for early 2026 describes a slow but discernible improvement in hotel transaction activity. Publicly available data compiled by real estate analytics providers show that the number of U.S. hotel sales has trended modestly upward over recent quarters, although volumes remain well below prior peaks. As more distressed properties trade and pricing expectations reset, cap rates have edged lower, with HVS citing a typical range in the 10 to 11 percent area for many assets, and somewhat lower for top-tier locations and higher-performing hotels.

Improved financing conditions are playing a role in narrowing the gap between buyers and sellers. Research from major brokerages indicates that easing interest rates, combined with more conservative underwriting, are enabling investors to reengage with select opportunities, particularly in markets where operating fundamentals are stabilizing and replacement costs are high. Even so, industry reports emphasize that lenders remain highly selective, favoring experienced sponsors, strong flags and properties with clear upside through repositioning or renovation.

HVS cautions that investors should scrutinize assumptions embedded in valuations, particularly around exit capitalization rates in lower-barrier markets. Analysts warn that models relying on aggressively low terminal yields for older limited-, select- and full-service properties may overstate achievable pricing in an environment where new supply is accelerating and demand growth remains moderate.

Segment Outlook: Extended Stay, Luxury and Select Service

The March 2026 pulse continues to highlight notable performance differences across hotel segments. Extended-stay hotels, which enjoyed robust demand during the early years of the recovery, are now facing more headwinds as significant new supply enters the market. Separate research from sector specialists shows that extended-stay RevPAR declined in 2025 across the largest U.S. metropolitan areas, reflecting both a surge in new inventory and softer demand from key corporate and project-based guests.

At the upper end of the market, luxury properties are expected to trail the national growth pace this year, according to HVS commentary, as many high-end destinations digest a wave of openings and renovations completed in recent years. While affluent leisure travel remains comparatively healthy, the segment is encountering increased competition and more measured rate growth than during the immediate post-pandemic rebound, especially in resort markets that benefited from earlier pricing power.

Select-service and traditional full-service hotels are experiencing a more nuanced landscape. HVS notes that older properties facing deferred maintenance or major renovation requirements are likely to see below-average performance and heightened pressure on net operating income. Conversely, well-located, newly built or recently renovated assets near stable demand generators are better positioned to capture incremental gains, particularly in markets benefiting from major events such as the upcoming international football tournament slated for later this year.

Forecasts Point to Stronger Upside Beyond 2026

Despite the measured tone of the 2026 outlook, both HVS and independent industry forecasts see potential for more meaningful gains in the latter part of the decade. CoStar’s latest national projections indicate that overall hotel performance this year is likely to resemble 2025, with no single catalyst expected to drive a sharp inflection. However, analysts anticipate that the combination of easing inflation, gradual economic growth and a full slate of large-scale sports and entertainment events could support stronger RevPAR growth in 2027 and 2028.

HVS underscores that new supply patterns will be a key variable in how this next phase plays out. After several years of constrained development, pipeline data from construction tracking firms show that U.S. hotel openings are set to accelerate, led by upscale and upper-midscale brands and a large contingent of extended-stay projects. While this expansion will add competitive pressure in some markets, it may also refresh aging inventories and create acquisition and conversion opportunities for investors seeking scale.

For now, the March 2026 U.S. Market Pulse frames the environment as one of cautious optimism. Operators are focused on maintaining pricing discipline, managing expenses and targeting high-value demand segments, while investors weigh selective acquisitions against ongoing macroeconomic and geopolitical uncertainty. The prevailing view in current research is that the U.S. lodging industry has moved past its most volatile post-crisis years and is transitioning into a slower, more sustainable growth cycle that will reward disciplined underwriting and market-specific strategies.