- Urban hotels outperformed expectations in Q1, with strong RevPAR growth in cities like San Francisco, Washington, DC, and New York, driven by large events and business travel.
- Maui showed significant recovery from 2023’s wildfires, with transient rooms sold up 70% year over year at Host Hotels’ resorts.
- Los Angeles hotels began rebounding from early 2025 fires, though many properties still reported steep RevPAR and EBITDA declines.
- Other urban standouts included Chicago, Philadelphia, and Houston, while San Francisco saw double-digit RevPAR gains tied to a robust convention calendar and civic improvements.
Urban Hotels Outperform In Q1
Despite a subdued macro outlook, hotel executives highlighted strong urban market performance in Q1 earnings calls, reports CoStar. Brands across the board highlighted rebounding group and transient demand, with weekday business travel also picking up pace.
RLJ Lodging Trust CEO Leslie Hale noted that “urban hotels continued to outperform the broader industry,” with several city properties showing high single-digit RevPAR gains. Weekday RevPAR—a key business travel indicator—rose 4.9% for the trust’s urban portfolio.
Maui And Los Angeles: Recovery Stories
Maui’s hotel market showed one of the strongest rebounds in the quarter. Host Hotels’ CEO Jim Risoleo reported that transient rooms sold were up 70% YoY, and RevPAR rose 16%. Despite lapping elevated 2024 group revenues from relief and cancellation-related bookings, Maui’s growth was driven by increased leisure demand.
Los Angeles, meanwhile, struggled through the lingering impacts of early 2025 wildfires. Pebblebrook Hotel Trust’s Jon Bortz said RevPAR at its nine LA properties dropped 23.4%, with EBITDA down 72.6%. However, improving sentiment and reduced losses forecast for Q2 suggest a slow recovery is underway.
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San Francisco And Washington Lead Urban Surge
San Francisco emerged as a first-quarter winner, buoyed by the JPMorgan Healthcare Conference and other events. Summit Hotel Properties posted 13.5% RevPAR growth in the city, beating local market averages. Executive leadership at multiple REITs pointed to ongoing improvements in safety and governance in San Francisco as tailwinds for continued recovery.
Washington, DC also impressed, driven by inauguration-related events and robust group bookings. Park Hotels, Pebblebrook, and RLJ all cited the capital among their top-performing markets.
Other Market Highlights
- Chicago and Philadelphia continued their post-pandemic recoveries, with Philadelphia’s RevPAR soaring over 26% for RLJ.
- Houston benefitted from strong convention activity and corporate expansion, with Apple Hospitality and Summit noting 7–9% RevPAR growth.
- Orlando was cited by Park Hotels as a market to watch, bolstered by ongoing theme park investment from Universal and Disney.
Why It Matters
The strong first-quarter performance in urban markets is a positive sign for the broader industry, especially as city hotels were among the slowest to recover from pandemic lows. With group travel and large-scale events returning, urban markets appear positioned to drive near-term growth, even as some resort and international segments soften.
What’s Next
Executives expect continued strength in urban markets through the second and fourth quarters, with robust convention calendars in cities like San Francisco and Washington, DC driving bookings. Recovery in markets affected by natural disasters—like Los Angeles and Hawaii—remains a work in progress but shows improving momentum.
