State and Regional Lodging Forecast (February 2025)

Forecast through 2027 of key lodging indicators including supply, demand, occupancy, average daily rate, revenue per available room, and revenue for California and California regions.

This report does not include any potential impacts from the Los Angeles wildfires.

Note: the new administration has introduced significant policy shifts even in the short time since this forecast was finalized. These rapidly changing conditions introduce further risk to the forecast stemming from the potential economic repercussions of a trade war and related negative consumer sentiment. Visit California will next refresh the forecast in May incorporating the most current assumptions and indicators.

• According to Tourism Economics’ February Lodging Forecast, California’s lodging industry is projected to experience a 0.5% decline in room revenue in 2024, followed by a 4.0% rebound in 2025, driven by balanced growth in demand (+1.8%) and ADR (+2.1%).
• Overall occupancy rates are projected to rise 0.5% in 2025, as demand growth outpaces supply increases, signaling a steady recovery in the lodging sector.
• Economic conditions remain favorable, with GDP forecasted to grow 2.6% in 2025, supported by real income growth, strong consumer spending, and declining inflation.
• Non-gateway regions are expected to experience a 0.6% decline in occupancy, due to slower demand growth and increased supply.
• Travel demand is shifting back to urban gateway markets, slowing recovery in non-gateway regions, which had previously rebounded faster following the pandemic.
• While gateway markets continue to recover, they will take longer to fully rebound compared to the rest of the state, as travel patterns gradually normalize.