Higher Room Rates Drive US Hotel Growth

The US hotel industry continued to improve in May 2026, with higher room rates once again driving growth, even as demand remains uneven across markets and hotel segments.

According to CoStar and STR data, US hotel revenue per available room (RevPAR) rose 5.4% year over year during the week of May 10–16. Average daily rates increased 3.9%, while occupancy climbed to 68.2%, the highest weekly level recorded so far this year.

Luxury hotels and major cities are leading recovery

Higher-end hotels continue outperforming lower-priced properties as travelers remain willing to pay premium rates in major urban markets and event-driven destinations.

Luxury and upper-upscale hotels benefited from stronger business and group travel demand, while economy hotels continued lagging behind. CoStar described the trend as “K-shaped,” meaning stronger hotels and markets are recovering faster than lower-tier segments.

Large US cities drove much of the recent momentum. Orlando posted one of the strongest gains after the Rolling Loud music festival, and large conferences boosted hotel demand. Philadelphia benefited from the 2026 PGA Championship, while Atlanta hotels saw higher occupancy during the DreamHack esports event.

Business and group travel support weekday demand

Weekday bookings have become an important driver for hotel performance, especially from Sunday through Thursday.

Business conferences, conventions, and group events accounted for most recent demand growth, helping offset softer leisure travel patterns in some markets. Luxury and upper-upscale hotels reported continued increases in group bookings compared with last year.

The industry is increasingly relying on corporate and event-related travel to stabilize occupancy and maintain pricing power.

Hotels continue prioritizing rates over occupancy

One of the clearest trends in the US hotel market is the industry’s focus on maintaining higher room rates instead of aggressively discounting to fill rooms.

Hotels have largely prioritized ADR growth because stronger pricing directly supports profitability, particularly in higher-end properties where travelers remain less price-sensitive.

This strategy has helped offset slower growth in some lower-tier segments and smaller markets, where occupancy recovery remains less consistent.

To learn more about hotel rates, from the government to AAA, consortia, and industry rates—and how they are calculated, read our dedicated article.

Earlier this month, IHG Hotels & Resorts reported a stronger first quarter in 2026, even as the Middle East became a clear pressure point. 

Photo by Zoshua Golah on Unsplash