The U.S. hotel sector faced another challenging month in June 2025, with nationwide occupancy slipping for the fourth consecutive month and corporate travel continuing to show signs of weakness, according to the latest data from industry analytics firm STR.

STR’s report, released this week, indicated that hotel occupancy across the United States dropped by 1.7% year-over-year to 68.5%. The average daily rate (ADR) saw only a slight increase of 0.4%, reaching $162.51. Meanwhile, revenue per available room (RevPAR), a key industry metric, declined 1.2% to $111.32, highlighting the combined pressures of lower demand and only moderate pricing growth.

Business Travel: A Persistent Lag

Corporate travel, historically a significant driver of weekday hotel demand, continues to underperform. STR’s research points to sustained declines in weekday RevPAR for the Monday-through-Wednesday period—a traditional bellwether for business travel activity. Except for a brief uptick in the week ending June 21, midweek performance in June and early July was consistently below 2024 levels.

“Since Memorial Day, with one exception, weekdays have consistently underperformed relative to weekends, indicating a continued weak business travel environment,” STR noted in its recent update. Typically, weekends are driven by leisure travelers, while weekday patterns more clearly reflect corporate activity. The data indicates that the recovery in business travel is stalling, even as leisure travel remains robust.

Travel managers and hospitality executives remain cautious about corporate demand for the remainder of 2025. According to the Global Business Travel Association’s June 2025 survey, 57% of U.S. companies have not yet returned to pre-pandemic 2019 travel volumes, with economic headwinds and ongoing adoption of virtual meetings cited as leading factors.

Segment and Market Performance

STR reported that the top 25 U.S. hotel markets continued to outperform other destinations in both occupancy and ADR. Notably, New York City led with the highest June occupancy rate at 88.5%, representing a 0.9% year-over-year increase. This sustained growth underscores New York’s appeal as a global destination for both business and leisure, buoyed by a busy event calendar and the recent reopening of icon properties like the Waldorf Astoria.

Conversely, markets such as New Orleans and Phoenix faced more significant challenges. New Orleans posted the lowest June occupancy among the top 25 markets at just 53.8%, a trend attributed to weaker convention and group business demand. Phoenix followed at 59.5%, impacted by a sluggish summer convention schedule and extreme heat.

Other major markets—including San Francisco, Chicago, and Washington D.C.—reported modest improvements in leisure and tourist demand but continued to see corporate bookings below 2019 levels, reflecting ongoing uncertainty in certain industries.

Industry Response and Future Outlook

Hotel operators are responding to these industry headwinds with a focus on flexible pricing strategies and targeted marketing to capture both leisure and emerging segments, such as international travelers and small business groups. Major hotel brands are also investing in new amenities and partnerships—for example, integrations with food delivery services and enhanced sustainability reporting—to differentiate their offerings and appeal to increasingly selective corporate clients.

One notable development: American Express Global Business Travel (GBT) recently expanded its partnership with Chooose to provide advanced hotel emissions reporting, reflecting stronger demand for sustainability and ESG compliance information from corporate travel buyers. Many companies are now factoring environmental metrics into their hotel program RFPs, a trend expected to accelerate through 2026.

Despite current challenges, the U.S. Travel Association projects that total U.S. hotel demand will gradually improve in the second half of 2025 as business confidence recovers and the conference sector ramps up. However, most analysts agree that a full return to pre-pandemic levels may not materialize until mid-2026, as remote work policies and cost-conscious travel management continue to suppress traditional business trip volumes.

Key Takeaways for Hoteliers and Corporate Travel Managers

• Occupancy and RevPAR remain below 2024 levels, driven primarily by sluggish corporate demand.
• Leisure travel compensates for weekday shortfalls in many markets but cannot completely offset the decline in business travelers.
• Top markets like New York City and Miami show resilience, though group and event-related business remains uneven.
• Innovations in sustainability reporting and guest services are becoming increasingly important differentiators in corporate travel procurement decisions.
• Hospitality leaders expect gradual recovery in demand as businesses adjust to evolving work and travel norms, but the pace is uncertain.

Conclusion

While the summer of 2025 brings a mixed outlook for the U.S. hotel industry, the data clearly underscores the ongoing challenges facing the business travel segment. Hotel companies that adapt to evolving corporate priorities, invest in guest experience, and embrace sustainability are best positioned to capture future demand as the recovery unfolds.

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