Bank cites less demand, economic uncertainty and airline concerns

Goldman Sachs lowered its outlook for US hotels, citing lagging consumer demand, growing economic uncertainty and concerns about the hotel industry. The bank now expects average revenue per available room (RevPAR) to grow by just 0.4% this year, down from a previous estimate of 1.4%.

Goldman analysts dropped their rating for Hyatt Hotels stock to “sell,” and downgraded Marriott International and Hilton Worldwide to “neutral.” 

The updated forecast does not account for a recession, Goldman said, which “would likely drive further downside.” The bank currently places the odds of a recession at 45%, noting that past economic downturns have brought double-digit declines in RevPAR.

The hotel industry is facing a decline in international tourism to the US, especially from Canada, which historically has been the country’s largest source of inbound visitors. Canadian trips to the US declined in February by double-digit percentages following President Trump’s talk of tariffs and annexation.

Government-related travel has also contracted, and Goldman’s analysts forecast a roughly 25% decline in government spending on travel in the coming year.

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