The hospitality industry entered 2026 navigating weather volatility, uneven market performance, supply expansion, and shifting economic signals. January 2026 hotel performance data underscores how sensitive the U.S. hotel market remains to disruption—while also revealing signs of stabilization beneath the surface. From Winter Storm Fern’s nationwide impact to extended stay pipeline concentration and moderating economic indicators, early 2026 presents a hospitality market defined more by recalibration than acceleration.
A Week Defined by Weather Volatility
Sunday’s Surge Before the Slide
U.S. hotels closed out January with significant swings driven by Winter Storm Fern, which disrupted travel across nearly 2,000 miles and directly affected 74 hotel markets.
For the week of January 25–31, national RevPAR fell 4%, driven by a 2.4 percentage-point decline in occupancy while ADR increased just 0.2%.
Sunday, January 25 stood in sharp contrast to the rest of the week. RevPAR surged 9.5%, and demand rose 9.4%, fueled by widespread airline cancellations and power outages. Airport hotels saw demand jump 32% and RevPAR increase 46%, compared to high-single digit gains in other location types.
Markets within the storm’s path experienced a 5.5 percentage-point occupancy increase on Sunday, driven by a 14.9% increase in demand. Markets outside the storm path also felt the downstream effects of airline disruptions, with room demand increasing 5.8%.
Early-Week Demand Losses
Monday through Wednesday reversed those gains. U.S. hotel RevPAR dropped 8.8% and demand declined 8.9%. Six states remained under states of emergency, and infrastructure damage significantly weighed on travel.
From Monday to Wednesday, demand declined by 887,000 rooms. Fern-affected markets accounted for 69% of that loss. In those markets, occupancy fell 8.6 percentage points and ADR declined 2.3%.
Lingering Effects and Market Outliers
From Thursday through Sunday, performance remained negative but stabilized somewhat. RevPAR fell 2.3% and demand declined 1.4%. Markets directly in the storm’s path continued to see sharper declines.
Nashville was a notable exception. Roughly half the population lost power at the storm’s peak. Hotels discounted rates for displaced residents, leading to a 27.3% jump in demand and a 13.8 percentage-point increase in occupancy. Despite a 13.8% ADR decline, weekly RevPAR rose 7%.
In addition to Winter Storm Fern, the industry was still contending with weakness in hurricane-impacted markets from the 2024 hurricane season. These markets posted an 18.5% RevPAR decline on a 13.8% drop in demand during the week. Las Vegas saw RevPAR fall 14.2% as demand declined 10.3%, partly due to group shifts including the Total Product Expo date change.
Excluding storm markets, 2024 hurricane-impacted markets, and Las Vegas, RevPAR in the remaining U.S. hotel markets rose 1.4%, entirely driven by ADR growth.
The Market Beneath the Disruptions
Core Performance After Adjustments
Removing Winter Storm Fern markets, 2024 hurricane-impacted markets, and Las Vegas reveals a steadier performance picture.
In the remaining markets, RevPAR increased between 1.4% and 1.6%. The Top 25 U.S. markets rose 1.1%, while all other markets increased 2.2%. Secondary and tertiary markets continued to outperform major metros.
Louisiana North stood out with RevPAR growth of 68.4%, driven by construction activity tied to Meta’s $10 billion AI data center campus outside Monroe. Texas North and Texas East also posted strong gains, and 13 additional markets recorded double-digit RevPAR growth.
Class-Level Performance Shifts
Group demand in luxury and upper-upscale hotels declined 5.5% during the storm week, peaking at a 12.9% drop on Monday. Major storm-affected markets including Atlanta, Dallas, Nashville, and Washington, D.C. saw pronounced group declines.
Upper-upscale through upper-midscale hotels accounted for 84% of total demand decline during the week. Luxury posted the lightest RevPAR decline at 0.5%.
Economy and midscale hotels accounted for just 7% of total industry demand decline, and economy hotels increased occupancy year over year. In Nashville, midscale and economy hotels posted a 67.5% RevPAR increase driven by a 59.6% increase in rooms sold.
Market positioning and segment mix continue to influence resilience during disruption.
January Snapshot: Stabilizing but Fragile
First Monthly Gain in 10 Months
Preliminary January results show U.S. hotel RevPAR increased 0.1%, which would mark the first monthly gain in 10 months if finalized.
ADR rose 0.4% for the month, below the 12-month average of 0.8%. Demand increased 17 days during January, but ADR surpassed inflation on only four of those days, highlighting limited pricing power.
Through January 24—before Winter Storm Fern impacted the final week—RevPAR was up 1.3% and demand had increased 1.5%. Based on daily trends prior to the storm, RevPAR was expected to rise approximately 1.1%.
Segment Performance
Excluding 2024 hurricane-impacted markets (-17.7%) and Las Vegas (-4.4%), the rest of the country posted 1.6% RevPAR growth.
Luxury hotels were the only class to post positive RevPAR growth for the month (+2.1%). Most other classes were flat, while midscale and economy declined 2.2% and 5.1%, respectively.
The data suggests stabilization in demand, but continued ADR softness across much of the hospitality industry.
Extended Stay: Scale, Pipeline, and Market Clustering
Current Inventory and Development
Extended stay represents a meaningful portion of the U.S. hotel supply.
There are approximately 11,685 extended stay properties totaling 1,303,939 rooms. The total U.S. hotel room count is typically around 5.7 million.
An additional 2,037 extended stay properties are under development, accounting for 212,295 rooms.
Across 175 U.S. markets with extended stay supply, the average pipeline-to-existing-supply ratio is 16.28%. The largest pipelines tend to correspond with markets that already have significant existing extended stay supply.
Geographic and Regulatory Considerations
In Texas Hill Country, which includes markets such as San Antonio and surrounding submarkets, development activity may be influenced by labor consistency challenges. Similarly, in Texas North, which includes the Dallas–Fort Worth region, labor availability remains a consideration as new extended stay supply moves through the pipeline.
In California markets, regulations tied to hotel room counts, along with rising wages and labor-related operating costs, may incentivize developers to favor extended stay formats.
Columbus, Ohio shows a high pipeline percentage relative to existing supply, driven by a comparatively limited base of current product.
Extended stay growth remains concentrated in already active markets rather than expanding into underserved areas.
Global Capital Watch: Japan and U.S. Debt Markets
Anticipated fiscal stimulus in Japan, including tax cuts without meaningful spending cuts, may require the Bank of Japan to remain accommodative and intervene in debt markets.
As Japanese debt yields decline, foreign debt—particularly higher-yielding U.S. Treasuries—becomes more attractive. Lower domestic yields in Japan may also push institutional capital outward in search of returns, potentially increasing capital flows into U.S. markets.
While hotels may not see a direct impact, structured debt pricing tied to discount rates and benchmark yields could become more favorable if global yields compress.
At the same time, a weaker yen could increase Japan’s tourism competitiveness, creating additional travel competition for U.S. markets.
Economic Reset: Affordability Over Appreciation
Initial jobless claims rose by 22,000 to 231,000 in the last week of January. Continuing claims increased to 1,844,000.
January job cuts totaled 108,435—the highest January level since 2009—with transportation, technology, and healthcare leading reductions. Employers announced 5,306 hiring plans, the lowest January total on record.
Job openings fell by 386,000 to 6.542 million in December, the lowest since September 2020. Openings are returning toward the 20-year average following elevated levels during the 2020–2022 fiscal stimulus period.
Inflation, as measured by Trueflation, is trending lower overall.
Moderating inflation and softer labor data suggest interest rates may move toward improving affordability rather than driving asset appreciation. For hotel owners and investors, the environment supports modest transaction tailwinds tied to debt affordability—not a valuation surge.
Positioning for Opportunity in a Reset Hospitality Market
Early 2026 hospitality trends reflect volatility layered over normalization. Winter Storm Fern demonstrated how quickly hotel performance can shift, yet underlying markets—when excluding storm-affected regions—show steady ADR-driven growth. Extended stay development remains active, though supply is clustering in already competitive markets. Economic data signals affordability rather than expansion.
There may be no imminent boom, but moderating inflation, improving debt conditions, and localized economic catalysts create selective opportunity.
If you are evaluating a hotel acquisition, disposition, refinancing, or repositioning strategy, understanding these hospitality industry trends is critical. Contact our team today to discuss how these market dynamics may impact your property or investment strategy.