The early performance story for U.S. hotels in 2026 is best described as uneven rather than uniformly weak. After a strong start to the year, the week ending January 10 marked the first negative week of 2026, with RevPAR down 3.3% year over year. While that shift may appear abrupt, the underlying drivers suggest something more nuanced: national performance is being skewed by a narrow set of markets and demand dynamics rather than signaling broad deterioration across the lodging sector.
Much of the pressure sits at the intersection of localized disruptions; concentrated group demand declines, shifting weekday versus weekend patterns, and the timing of debt maturities tied to recent transaction activity. Understanding where stress is forming requires moving beyond headline numbers and examining market-specific performance, segment-level demand trends, and ownership timing.
National Hotel Performance Is Being Skewed by Localized Disruptions
Why “Hurricane Markets” Still Matter in 2026 Comparisons
Throughout this report, references to “hurricane markets” reflect markets that experienced hurricane-related disruptions in 2024. Those events temporarily inflated demand through displacement, insurance activity, and recovery-related travel. As those effects fade, year-over-year comparisons in early 2026 appear sharply negative—despite the absence of new hurricane activity in 2025.
In these hurricane-impacted markets, RevPAR declined 25.5%, driven by a 10.9% drop in occupancy and a 9.2% decline in ADR. While these markets represent a relatively small share of U.S. supply, the magnitude of their normalization gives them an outsized influence on national averages.
How Large Metros Are Pulling Down the National Average
Beyond hurricane-impacted areas, weakness was concentrated in the Top 25 markets. Excluding Las Vegas and Tampa, those markets posted a 4.1% RevPAR decline. Falling occupancy drove the result, with total U.S. room demand down approximately 310,000 room nights for the week.
Roughly 260,000 of those lost room nights came from group demand declines in the Top 25 markets. Several markets saw especially sharp pullbacks, including San Diego and Los Angeles. While Los Angeles comparisons were partially influenced by prior-year wildfire-related displacement demand, the scale of the current decline points to broader group softness.
Markets Performing Well Are Offsetting, Not Eliminating, Weakness
Not all large markets struggled. St. Louis led all U.S. markets with a 34.9% increase in RevPAR, followed by Minneapolis, Nashville, San Francisco, and Phoenix, each posting double-digit gains on strong demand growth. Minneapolis saw its strongest demand increase earlier in the week, while Nashville recorded the largest total increase in room nights nationwide.
These divergent outcomes underscore that national softness is being driven by a narrow subset of markets rather than by a broad-based decline.
Demand Weakness Is Concentrated — Not Broad-Based
Demand declines remain highly localized. Among the Top 25 markets, seven posted double-digit RevPAR declines, led by San Diego and Los Angeles. In Los Angeles, the absence of last year’s wildfire-related displacement demand explains part of the year-over-year decline, but the magnitude of the drop suggests that reduced group activity is a more significant factor.
At the same time, many markets outside the Top 25 continued to perform relatively well. In the remaining non-hurricane markets, RevPAR increased slightly, supported by modest occupancy growth that offset weaker ADR. More than half of these markets posted positive RevPAR growth, reinforcing that demand softness is not system wide.
Segment-Level Performance Is Telling a Clearer Story Than Headlines
Upper-Midscale Demand Is Growing Across Markets
While all hotel classes posted year-over-year declines in RevPAR and occupancy, demand trends varied by segment. Upper-midscale hotels were the only class to post a net increase in demand, adding approximately 35,000 room nights for the week and building on gains from the prior week.
Importantly, this demand growth does not appear confined to markets that are otherwise outperforming. Upper-midscale demand is occurring across markets, including those experiencing broader pressure, suggesting that segment-level resilience can exist even when market-level metrics are soft.
Group Exposure Is Driving Upper-Upscale Weakness
Upper-upscale hotels experienced sharper occupancy declines than economy hotels, with nearly all of the demand decline concentrated in the Top 25 markets. Los Angeles, Orlando, San Diego, and Washington, D.C. accounted for more than half of the upper-upscale demand loss, with lower group demand cited as the primary driver.
Economy and midscale hotels posted the largest RevPAR declines overall, with hurricane-impacted markets accounting for more than half of economy demand losses. Across segments, outcomes are being shaped less by national travel demand and more by exposure to group business and localized disruptions.
Weekday Versus Weekend Performance Is Reshaping Hotel Economics
Weekday Softness Remains the Core Challenge
Nationally, Monday through Thursday RevPAR declined 4.7%, reflecting ongoing weaknesses in weekday corporate and group travel. This trend aligns closely with the decline in group demand across large markets and continues to weigh overall performance.
Weekend Leisure Demand Is Providing Support
Weekend results were notably stronger. In non-hurricane markets, weekend RevPAR increased 3.3%, driven primarily by occupancy growth. Even within the Top 25 markets—excluding Las Vegas and Tampa—weekend RevPAR rose 0.4%. More than one-third of non-hurricane markets posted double-digit weekend RevPAR gains.
This widening gap between weekday and weekend performance is reshaping revenue management strategies, staffing models, and underwriting assumptions across the sector.
Debt Maturity Timing Is Emerging as a Key Risk Factor
Why Transaction Timing Matters More Now
Beyond operating performance, capital structure considerations are becoming increasingly important. Properties acquired during the 2021–2022 transaction window are approaching five-year debt maturities at a time when refinancing conditions are tighter and performance has normalized.
Stress May Surface Through Refinancing Before Operations
Even in markets that remain relatively stable, refinancing pressure may force action. Identifying ownership cohorts based on purchase timing allows for a more proactive and targeted approach to sourcing potential opportunities.
Tulsa as a Case Study in Strategic Market Familiarity
Using Purchase-Date Analysis to Identify Early Pressure
Tulsa, Oklahoma illustrates how market familiarity can provide an advantage. Using CoStar data, economy through upper-midscale properties in the market were analyzed by purchase date, creating a matrix that highlights recent transaction activity.
Why Local Knowledge Matters
The goal is not to label Tulsa as distressed, but to identify which owners may face refinancing pressure first. Buyers who acquired properties between 2021 and late 2022 are now approaching critical debt maturities. In a market with fragmented ownership and manageable asset sizes, this creates a defined pool of properties where stress may surface earlier than in national data.
Key Takeaways for Owners, Buyers, and Capital Providers
The lodging outlook entering 2026 remains uneven rather than uniformly weak. National softness is being driven by the normalization of hurricane-impacted markets from 2024 and by demand declines concentrated in select large metros. At the same time, upper midscale remains the only segment adding demand; weekend performance continues to outpace weekdays, and group exposure remains the clearest pressure point in major markets.
For owners, buyers, and capital providers, this environment rewards selectivity and disciplined analysis. Understanding where stress is forming—whether through market dynamics, segment behavior, or debt timing—matters more than reacting to national headlines. For those seeking to better understand how these trends apply to specific markets, assets, or strategies, we encourage you to contact our team to discuss how we can help navigate the evolving hospitality landscape in 2026.