Only about 600,000 Canadians are expected to visit Greater Boston this year, down from 900,000 in prior years. iStock photo

Thanks partly to a strong luxury travel market, Boston’s hotel industry continues to hold its own despite a recent drop-off in foreign visitors to Boston.

According to Pinnacle Advisory Group data, the overall Boston-Cambridge hotel occupancy rate hovered at about 77 percent in 2025, a strong number that roughly matches the region’s overall 2024 performance.

Along with a modest rise in the industry benchmark of RevPAR (revenues per available room) rate, the Boston-Cambridge hotel industry managed to outperform the rest of the nation and even the top 25 metropolitan hotel markets in the U.S., according to Pinnacle.

And the occupancy and RevPAR rates, as well as average daily room rates, could rise in 2026 due to Greater Boston’s hosting of World Cup soccer matches this summer and an expected small bump in domestic tourism tied to the 250th anniversary celebrations of the U.S.

“The thought is that 2026 is going to be strong,” said Alan Suzuki, a managing director and leader of the JLL hotel team in Boston. “People generally think it’s going to be a better market because of the World Cup and 250th [celebration]. It’s not going to be a massive needle-mover. But they’re going to be a good shot in the arm.”

A Needed Boost to Local Lodging

Still, there are lingering industry weaknesses that are leaving some hospitality industry figures nervous about the near future.

Chief among them is the recent rather dramatic drop-off in foreign visitors to Boston, a trend seen across the U.S. and generally tied to Trump administration trade policies and its sometimes hostile rhetoric towards certain countries.

In particular, Canadians, who don’t exactly like President Trump’s constant references to their country as a “51st state,” have reduced their visits to the U.S. in considerably large numbers.

In Greater Boston, Canadian visitors last year fell to about 650,000 to 700,000, down from about 900,000 in prior years, according to data from Meet Boston, the regional hospitality industry group previously known as the Greater Boston Convention & Visitors Bureau.

And Canadian visitation to the region is expected to drop to about 600,000 visitors in 2026, according to MeetBoston.

Meanwhile, visitations from other countries are also down, such as tourists from Germany. Travel from the central European powerhouse is down about 10 percent of late, according to Meet Boston.

“It’s been a little bit of a challenge,” Nik Pereira, senior vice president of sales for Meet Boston, said of foreign travel to Boston.

Other hospitality officials note that federal government travel also declined in 2025, due to last year’s DOGE spending cuts and dramatic, although sometimes temporary, federal workforce reductions.

Luxury Segment a Source of Strength

But a clear bright spot for the region has been luxury travel, according to industry officials.

According to CoStar data provided by JLL, the city’s higher-end hotels fared better than other hotel categories in Boston.

Last year, hotels in the Boston Central Business District/Airport submarket – one way to measure a core luxury market – recorded an occupancy rate of 77.1 percent while other Boston hotels saw an occupancy rate of 72.5 percent.

Meanwhile, the Boston CBD/Airport segment saw a 0.4 percent decrease in its average RevPar in 2025, while other Boston hotels saw a full 2 percent decline in their RevPar rates last year, according to CoStar data.

Pinnacle Advisory’s numbers are slightly different, due partly to its wider coverage area (Boston and Cambridge) and its definition of what constitutes a luxury hotel (facilities with average room rates of $500 per night or higher).

But its data shows roughly the same trend: The region’s luxury hotel market is outperforming other hotel markets in the area.

According to Pinnacle, the nine local hotels it defines as luxury saw their average RevPar rate increase last year by 10 percent. Pinnacle defines the Boston-Cambridge luxury market as comprising the Boston Harbor Hotel, the Charles Hotel in Cambridge, Four Seasons Boston Commons, Four Seasons Dalton Street, Mandarin Oriental Hotel, Raffles, Ritz-Carlton, Newbury Boston and XV Beacon Hotel.

Spain’s largest hotel chain, Eurostars, acquired the 80-room Boxer hotel in Boston’s West End last fall for $23.6 million. Photo courtesy of JLL

Bifurcated Market Performance Emerges

In contrast, so-called economy hotels, considered the lowest tier of hotels in the Boston-Cambridge market, saw a RevPAR decrease of 5 percent, according to Pinnacle.

“It’s a pretty striking difference between the two,” said Sebastian Colella, managing principal at Pinnacle Advisory. “One segment is clearly performing much better than another.”

A similar luxury-vs-non-luxury travel gap is seen across the U.S.

The reason: The wealthy still have the big bucks to travel – and many others don’t amid persistent inflation and general worries about a shaky economy.

Indeed, many analysts now assert that the U.S. is now in a “K shaped” economy, in which one portion of the economy branches upward while the other branches downward.

“It’s all directly related to prices,” said Colella of the U.S. hotel industry’s own “K-shaped” performance of late. “Basically, the ones worried about egg prices are precisely the ones forgoing travel. Those with a lot of money are traveling.”

Said MeetBoston’s Pereira: “It’s kind of a bifurcated economy right now. The rich are able to travel more while the middle class is struggling.”

What Luxury Travelers Want

What are luxury travelers expecting when they arrive in Boston?

“They’re looking for experiences,” said Pereira. “They’re looking for culinary experiences. They want history. They want to shop and go to the museums.”

They’re also dropping money on summer yachting incursions and even helicopter rides to get bird’s-eye views of the city and region.

And they also like to go to Boston sporting events – even foreigners who enjoy attending NBA and, recently, NFL games. In particular, many German visitors to the city are fans of the New England Patriots, Pereira said.

Despite weaknesses in the local hotel market, Pereira said he’s’ optimistic about the coming year, especially when the World Cup comes to Boston this summer.

“We’re seeing strong [bookings] for June and July,” he said of the two months when seven World Cup games are scheduled to be played at Gillette Stadium in Foxborough.

Bruce Ford, senior vice president and partner at Lodging Econometrics in New Hampshire, said the entire region is expected to benefit from the World Cup and 250th Anniversary celebrations.

“There’s a lot of good things on the horizon for Boston,” he said. “I think it’s going to be a strong year.”