- Hotel demand in 2025 was softer than expected, with performance buoyed by a handful of key markets.
- Uncertainty around policy, international travel, and spending slowed hotel transactions this year.
- Barry Sternlicht emphasized the need for passion and enjoyment in the hotel business.
- Marriott ended its agreement with Sonder following a default, impacting guest bookings.
Pivotal Hotel Demand Trends
CoStar reports that US hotel demand trended lower than forecast in 2025, despite industry hopes for stronger performance. Sector analysts noted that only a select number of major markets were masking underlying weakness elsewhere nationwide. This uneven demand created ripple effects across transactions, investment, and development activity.
Leadership Insights and Market Uncertainty
Starwood Capital Group’s Barry Sternlicht’s remarks to industry peers captured the essence of 2025. He urged hotel executives to remain passionate, warning that lacking enjoyment in the business is a sign to consider other careers. His call for genuine engagement underscored the importance of long-term commitment, particularly as market unpredictability increased.
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Transaction Activity Struggles
Market hesitation was also reflected in a persistent slowdown in hotel deal volume. Investors expressed concern about ongoing trade policy shifts, government spending priorities, and declining international visitation. These uncertainties prompted many to delay acquisition decisions despite having access to capital.
Major Partnerships Shift
In a significant development, Marriott International ended its agreement with Sonder Holdings due to financial difficulties. The move abruptly removed Sonder’s properties from Marriott’s booking channels, impacting hundreds of guest reservations.
Immigration Enforcement and Operations
Legal experts warned hoteliers to prepare for increased scrutiny from immigration enforcement agencies. The US government’s intensified focus on compliance brought operational challenges for properties dependent on both documented and undocumented labor. This shift parallels broader federal housing policies, where immigration status is increasingly tied to program eligibility and enforcement mechanisms.
