Longfellow Bridge between Boston and Cambridge on a foggy day in 2018. Several factors suggest the region’s hotel market will have a better year in 2026. iStock photo
Federal Reserve Chair Jerome Powell has spent much of 2025 reminding us that “uncertainty is with us all the time,” recently using the analogy of “driving in the fog.”
Economic headwinds, compounded by political divide, have tempered consumer confidence, dampened travel spending and kept hotel operators focused on managing rising costs at a time when pricing power is limited.
Yet through this same haze, the Boston and Cambridge lodging market appears better positioned as it heads into 2026.
The Boston and Cambridge lodging market is expected to close 2025 with occupancy holding steady and room rates posting modest gains.
Occupancy should finish the year around 77 percent, as demand and supply continue have grown at similar rates. Average daily rate (ADR) is projected to edge just above $300, reflecting growth of less than half a percent.
As a result, revenue per available room (RevPAR) is expected to see a slight uptick from 2024, under one percent. While this pace is notably slower than the 4.5 percent growth achieved last year, the Boston and Cambridge lodging market is still on track to outperform the national market, where RevPAR is projected to decline.
Looking Ahead to 2026
Despite lingering economic uncertainty, several factors give the local market a positive positioning as it moves into next year.
Signature 2026 events, including seven FIFA World Cup matches at Gillette Stadium, the return of Sail Boston and celebrations tied to the nation’s 250th anniversary, should deliver meaningful economic impact and a lift in both leisure and group roomnights to the region.
After a sluggish 2025 marked by trade tensions, shifting tariff structures and tighter immigration policies, companies are expected to enter 2026 with greater visibility into budgets and operations. As the impact of these policies becomes clearer, business travel should see a modest but meaningful uptick.
And Boston’s high barriers to entry continue to limit new hotel development. With only two hotels slated to open in the second quarter of 2026, supply is expected to increase by just 1.0 percent, allowing operators to retain pricing leverage when demand materializes.
But the Fog Hasn’t Fully Lifted
At the same time, several factors continue to constrain the market’s full recovery.
Lodging demand growth nationally remains weak, and Boston will feel those effects. Inflation is elevated, consumer spending is soft, business and group travel remain cautious and international travel continues to lag. Even with potential cuts to interest rates, meaningful improvement will likely depend on greater clarity around fiscal and government policies.
Sebastian Colella
Group business, roughly 20 percent of Boston and Cambridge’s overall demand, experienced declines through much of 2025, a trend expected to extend into early 2026. Convention activity is projected to generate about 7 percent fewer roomnights next year, with most of the impact felt in the first and second quarters.
While corporate demand is expected to rise in 2026, rate increases are likely to remain modest. Furthermore, economic caution has made leisure travelers more price-sensitive, particularly in the lower and middle-tier segments.
At Pinnacle Advisory Group, we anticipate that demand growth will outpace new supply next year, leading to incremental occupancy gains and modest rate improvement. Comparisons to the summer of 2025 which underperformed, should help year-over-year performance metrics, though growth will remain measured.
The Boston and Cambridge lodging market isn’t expected to fully recover from the pandemic in 2026, but Boston’s strong fundamentals, limited supply growth and calendar of major events provide a clearer, if still hazy, path forward.
Sebastian J. Colella is the vice president and incoming managing principal at consultancy Pinnacle Advisory Group.
