With high occupancy and record levels of average daily room rates in 2024, Boston lodging performance is projected to continue to improve in 2025. iStock photo
Boston’s appeal as a travel destination stems from its storied past and dynamic culture. Visitors are drawn to its historical landmarks, world-class museums, legendary sports teams and renowned academic and medical institutions.
Beyond tourism, Boston boasts a strong and diverse economy driven by finance, technology, healthcare, education and biotech. With a highly educated workforce from institutions like Harvard and MIT, the city’s resilient industries continue to fuel economic growth for the region and serve as a strong international draw.
This well-balanced foundation has been key to the recovery of Boston’s hotel industry post-COVID, garnering strong interest from the investment community.
2024 Performance and Recovery
According to CoStar Group, the Boston lodging market achieved a 74 percent occupancy in 2024, marking a full recovery from the pandemic and outperformed the majority of major markets, ranking 5th in terms of occupancy performance nationwide.
The top 25 markets collectively ended 2024 three points below 2019 occupancy levels, showing Boston’s comparative resilience. Boston’s average daily rate (ADR) finished 2024 at $232, ranking 3rd overall behind only New York city and Hawaii’s most populous island, Oahu.
As a result, Boston achieved a RevPAR (revenue per available room) of $172, securing the third-highest position nationwide, representing an increase of 17 percent as compared to 2019 (pre-pandemic levels), surpassing the aggregate top 25 markets’ RevPAR growth of 13 percent.
Boston’s tourism industry is supported by Boston Logan International Airport. According to Massport, in 2024, the airport recorded 44 million passengers, up 7 percent from the prior year and 2 percent over 2019.
Unlike other markets’ slow return to inbound international travel, Boston’s international passenger volume exceeded pre-pandemic levels (up 16 percent over 2019) while domestic passenger counts fell just short (down 1 percent versus 2019). International travelers play a key role in Boston’s hotel performance as they generally represent longer length of stay patterns and higher average spending.
Less Spillover from Conventions
While the Hynes Convention Center has been operating at reduced capacity given facility improvements currently underway, the Boston Convention & Exhibition Center is positioned for a record year in 2025.
According to Pinnacle Advisory Group, there are more than 500,000 room-nights projected for 2025.
With increased lodging supply in Boston’s Seaport submarket, convention-related compression into other neighborhoods is lower, with fewer spillover bookings into Back Bay, Downtown and Cambridge.
While there are fewer compression nights, the average occupancy during non-compression periods was roundly 75 percent, representing high occupancy levels.
Where compression has had a significant impact is on ADR. Despite fewer compression nights, ADR has increased considerably. Between 2013 and 2024, compression night ADR increased by $137, representing a compound annual growth rate of 4 percent, helping to drive profitability for hotels.
What’s in Store?
With high occupancy and record levels of ADR in 2024, Boston lodging performance is projected to continue to improve in 2025, though at a modest level. Key trends include limited additions to supply, a strong group pace, the impact of return-to-office, cost pressures and an increased volume of transactions.
After an influx of hotels opening pre-pandemic, new construction has been limited due to high costs, competing development in other asset classes and lack of available land. Only one hotel opened in 2024 (CitizenM Boston Back Bay, with 399 rooms) with no new hotels confirmed for 2025. This lack of new supply will help maintain pricing power; however, Boston’s ADR already ranks 3rd in the country. Lack of new hotel development may amplify pricing pressures and cause the market to become inaccessible to certain price-sensitive travelers.
Jenna Aragosa
Despite periodic closures of the Hynes Convention Center to address facility improvements, overall group pace for the city is trending well for 2025. Corporate group demand is reported to be strong and expected to remain stable. While some small-group and association demand could be affected by economic uncertainties and cost-cutting measures, overall, group demand is trending positively.
With more companies pushing for a complete return to office, such as Amazon and JPMorgan, hoteliers are looking to benefit as a result. Overall office leasing velocity is making a steady recovery. Recent trends reported by CBRE highlight strong momentum, with total leasing activity for 2024 reaching 4.8 million square feet. In the fourth quarter alone, leasing velocity totaled 1.9 million square feet, the third-highest quarterly leasing volume recorded in the past 15 years.
Nadia Cismesia
Metro Hit Record Rates
Boston hotels hit record ADRs in 2024 which helped manage rising labor and operating costs. However, as growth stabilizes and costs continue to increase, margins are eroding.
To help mitigate cost increases, many hotels have reduced daily cleanings, embraced automation and sought opportunities for streamlining food and beverage offerings. Additional sustainability initiatives can also help cut rising energy costs.
Still, labor pressures are ongoing in the city and could have major implications for hotel operators. Hotels must carefully balance cost-cutting measures, especially if operating at record ADR levels, to ensure guest expectations are met.
After a slow 2024, brokerage firms expect hotel investment to accelerate in 2025. Boston ranks 4th alongside DC, Phoenix and Miami in CBRE’s 2025 U.S. hotel investor intentions survey due to the city’s limited supply growth, diversified demand base and strong yields.
Loan maturities and costly brand-mandated renovations are likely to increase the number of transactions while the gap between buyer and seller expectations narrows. To spur investment activity, investors are looking for additional cuts to the federal funds rate.
Overall, 2025 looks promising for Boston. Despite economic uncertainties, inflation pressures and labor challenges, strong demand and a diverse economy will support the city’s hotel industry long-term.
Jenna Aragosa is vice president and Nadia Cismesia is a manager at hotel consultancy CHMWarnick.
