While the outlook for Boston hotels’ revenue growth is positive, expense pressures persist, driven by continued increases in labor and other operating costs. iStock photo
The year 2025 was defined by uncertainty on both a macroeconomic and hotel level with economic uneasiness surrounding inflation and employment leading to weakened lodging demand, particularly within the economy and mid-priced segments. According to CoStar, overall U.S. occupancy in 2025 of 62 percent was down 1.2 percent year-over-year with ADR of $161 up 0.9 percent and RevPAR of $100 was down 0.3 percent.
On the corporate side, the delayed return to office (still just above 50 percent of 2019 levels nationally) has continued to weigh on overall corporate demand, although corporate travel demand has recovered to nearly 90 percent of 2019 levels.
Additionally, Federal budget cuts reduced government demand in 2025 and further pressured corporate travel budgets, particularly within the group segment.
International inbound travel also softened, down approximately 13 percent from 2019 levels, with Canadian visitation notably weaker, as a result of changes in immigration policies and negative outside perception of the U.S.
What Happened in 2025?
With similar trends to what was experienced nationally, the broader Boston market, loosely defined as all of Massachusetts east of Interstate 495, exclusive of Cape Cod, finished 2025 with occupancy of 72.5 percent, down 2 percent year-over-year. The region’s average daily rate (ADR) was $232 – flat year-over-year – and its revenue per available room (RevPAR) was $169, down 2 percent year-over-year.
The Boston central business district demonstrated modestly stronger performance, with occupancy down 0.7 percent, ADR up 0.2 percent, and RevPAR down 0.4 percent. Within the CBD, transient RevPAR increased 0.5 percent, but this was offset by a 3.6 percent decline in group RevPAR.
All six CoStar-defined submarkets declined in 2025, with many suburban markets, such as Andover/Danvers, experiencing more significant declines.
The cities of Boston and Cambridge were disproportionately impacted by the pullback in international travel given their strong base of inbound visitors tied to education and medical tourism. Additionally, National Institute of Health budget cuts negatively impacted the region’s life sciences sector, dampening corporate demand amid lower biotech employment levels and rising lab vacancy.
Convention-related demand also softened in 2025. According to the Massachusetts Convention Center Authority, the Massachusetts Convention & Exhibition Center and the John B. Hynes Veterans Memorial Convention Center, which has been under renovation, welcomed fewer than 700,000 attendees in 2025 (estimated through year-end) compared to more than 830,000 attendees in 2019.
Summer Expected to Offer Boost
Despite these headwinds, Boston market forecasts for 2026 point to performance improvement from 2025 levels.
According to CoStar, the Boston market is projected to achieve an occupancy of 72.3 percent (down 0.4 percent), ADR of $239 (up 3 percent), and RevPAR of $173 (up 2.6 percent) in 2026, exceeding the estimated U.S. RevPAR growth of 0.6 percent for the same period.
Marissa Galuppo
The CBD submarket is expected to lead the market’s recovery in 2026, with forecasted RevPAR growth of 4.8 percent, driven by a 1.0 percent increase in occupancy and 3.8 percent growth in ADR.
While January through April are anticipated to see year-over-year RevPAR declines in the broader Boston market, June and July are expected to materially lift annual performance in 2026, with RevPAR in July notably projected to increase 15 percent year-over-year, driven largely by seven 2026 World Cup matches at Gillette Stadium, as well as the United States’ 250th Anniversary celebration.
The remaining five months of the year are all expected to see year-over-year gains, albeit significantly more moderate than those of July, partially attributed to muted supply growth as result of the inflationary pressure from tariffs and high interest costs.
While the outlook for Boston hotels’ revenue growth is positive, expense pressures persist, driven by continued increases in labor and other operating costs, making bottom-line profitability growth more difficult to achieve.
Marissa Galuppo is a manager at Beverly-based hotel asset management and advisory firm CHMWarnick.
