For the data behind the commentary, download the full Q1 2026 U.S. Hospitality Report.
Q1 2026 Hospitality Key Trends
- RevPAR Acceleration: The U.S. hospitality market returned to growth in Q1 2026, with the 3-month RevPAR rising by 3.8% year-over-year (YOY) to $96. This was driven primarily by ADR gains, which outpaced inflation for the first time in several quarters. March’s performance was particularly strong, with RevPAR YOY growth totaling 5.9%.
- Mixed Performance Across Markets: First quarter performance varied significantly across the major hospitality markets. San Francisco/San Mateo led all markets, posting 3-month RevPAR growth of 31.2% YOY, followed by Minneapolis and Miami, with gains of 12.7% and 12.1%, respectively. In contrast, New Orleans recorded a -20.4% YOY RevPAR decline (the city hosted the Super Bowl in Q1 of last year), while Tampa Bay and Washington, D.C., also posted yearly declines.
- Potential Margin Relief: Hotel operating margins have been under pressure in recent years due to elevated labor, insurance, utilities and other operating costs. However, recent ADR acceleration above inflation may provide some relief, particularly for hotels with stronger rate integrity and limited occupancy-driven expense growth. While margin recovery will likely be uneven, sustained pricing power should help offset expense pressures and support improved profitability.
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Demand Improves as Q1 Progresses: First quarter hotel demand was generally healthy, though January’s performance was muted by two major winter storms that affected several regions of the country. However, demand trends improved as the quarter progressed, with February and March showing stronger momentum than the start of the year. Group demand increased 1.6% YOY during Q1, accelerating to 3.0% during the latter part of the quarter.
- Transaction Activity Rebounding: Hotel sales volume reached almost $9.4 billion in Q1, the second consecutive quarter of strong gains and a 64.0% YOY increase. Limited-service volume nearly doubled YOY while full-service volume rose 36.8%.
For the data behind the commentary, download the full Q1 2026 U.S. Hospitality Report.
