Sustained growth, softened momentum: After a strong rebound in 2024, demand growth continued into early 2025, though at a more moderate pace. STR performance remained healthy, with national occupancy climbing back above the pre-pandemic average.

ADR rebounds with less volatility: Average daily rates (ADR) saw continued growth after stagnating in 2023. The gap between ADR and the AirDNA Repeat Rent Index (RRI) narrowed as the impact of new listings on host pricing power diminished.

Booking behavior shifts: Booking lead times have shortened significantly across all market types. A shift toward last-minute booking is complicating demand forecasting and depressing forward-looking pacing data, even as actual occupancy trends remain positive.

Steady progress toward full recovery: Occupancy is projected to increase gradually through 2026, supported by healthy job and income growth, improving affordability, and relatively balanced supply and demand dynamics.

Market maturity and divergence: Growth rates are converging across market types. While Small City/Rural and Mid-Size City markets remain growth leaders, Large City Urban and Suburban markets are regaining momentum after regulatory and affordability-related slowdowns.

Moderate inflation risks ahead: Recent tariffs and geopolitical instability are expected to create a one-time inflation spike in the second half of 2025, with a milder effect on ADR growth than in previous inflation cycles.

Policy shifts add uncertainty: Dramatic trade policy changes under the Trump administration introduced new volatility into inflation and interest rate forecasts. Oxford Economics assigns only a 40% likelihood to the baseline scenario, underscoring elevated macroeconomic uncertainty.

Strong starting point limits growth potential: Despite policy risks, the U.S. economy began 2025 in excellent shape with low unemployment, solid GDP growth, and improving inflation trends. This cushions downside risk but limits how much stronger conditions can get.

Supply is set to reaccelerate: Falling interest rates are expected to revive STR supply growth in late 2025 and into 2026, especially in Suburban and Urban markets. However, the transmission of lower rates to mortgage markets and STR listings comes with a lag.

Performance dispersion widens: Domestic leisure markets, especially Coastal and Mountain/Lake destinations, are benefiting from a weaker dollar and continued consumer appetite for travel. International travel is softening slightly, driven largely by political friction with Canada.