Despite current demand headwinds, Boston still benefits from one of the most balanced bases of demand in the country and has three big demand-drivers ahead this summer. iStock photo

Like the broader U.S. hotel market, Boston’s regional and downtown hotel markets experienced RevPAR declines in 2025.

This performance trend was driven by a number of factors including an abnormal convention calendar, a material decline in inbound Canadian travel to the New England region, continued pressure in Cambridge and on businesses tied to federal funding, and other macro headwinds that have resulted in a broad-based pullback in hotel room night demand nationally.

Regionally, the Greater Boston area as tracked by CoStar, an area that stretches from the New Hampshire border to the northern boundary of Cape Cod and east of Worcester, experienced a revenue per available room (RevPAR) decline of 2 percent driven by a loss in average daily rate and occupancy that flatlined.

This regional decline was par for the course last year as 15 out of the 25 largest hotel markets in the country posted varying loses in RevPAR. As a whole, the U.S. hotel market finished the year with a 0.3 percent RevPAR decline.

The Boston central business district market as tracked by CoStar (inclusive of the airport and exclusive of Cambridge) posted a RevPAR decline of 0.4 percent, in line with the national average.

Of particular note, general managers in the city cited Canadian travel being off by as much as 40 percent at certain hotels. Leisure destinations across the region were also heavily impacted.

Logan Airport surprisingly posted 3.8 percent growth in international passenger traffic last year with just a 3.2 percent loss of Canadian air traveler.

Data Supports the Optimist’s Case

Despite current demand headwinds, Boston still benefits from one of the most balanced bases of demand in the country and is well-positioned to achieve significant RevPAR growth in 2026.

This year has the potential to be an outlier year for the city given the increased demand anticipated for the Sail Boston tall ships festival, the FIFA World Cup soccer tournament, a right-sizing convention calendar and America’s 250th anniversary celebrations. One of the hotel industry’s main research coverage groups recently estimated that FIFA could induce hotel demand in Boston equivalent to nearly two Super Bowls.

Looking beyond 2026, CBRE believes that significant barriers to new hotel construction in Boston during the next cycle should result in well-below-average supply growth and a dramatic expansion in asset values.

While capitalization rates remain generally elevated and while only a select few assets have traded each year, Boston remains highly in favor with institutional investment community, both domestically and internationally.

Over $2 billion worth of hotel assets have transacted locally since 2020. In 2025, five assets traded in Boston and Cambridge at an average price of approximately $400,000 per room and an average going-in capitalization rate north of 7 percent.

Assets in Leisure Destinations Performing Best

The strongest and most durable regional sub-sector within the broader New England hospitality ecosystem continues to be assets within leisure destinations.

Joe Cookson

CBRE’s Northeast Resort Set, a collection of 24 resorts within leisure destinations around the region and a proxy for regional resort performance, achieved RevPAR growth of 2.6 percent last year, nearly 300 basis points above the national average. Over a 33-year period, this set has grown RevPAR at 5.4 percent annually.

This is largely due to a base of supply in leisure markets around New England that has grown at a compound average rate of 0.6 percent, a third of the national average over the same time period.

Due to one of the most severe supply/demand imbalances in the country, the best resorts in the Northeast can generate average daily rates well north of $1,000 per night and net operating income in excess of $100,000 per room.

Joe Cookson is a Boston-based vice president of hotel investment sales at commercial brokerage CBRE.