North America Hotel Market Outlook to 2030

North America Hotel Market Overview

• The North America hotel market is valued at USD 120 billion, according to recent reports based on a five-year historical analysis. This market is primarily driven by the resurgence of tourism post-pandemic, increasing corporate travel, and a growing preference for leisure stays. Several factors contribute to this growth, including the rising popularity of boutique hotels and extended-stay options. In addition, business travel continues to recover, with the market seeing a notable uptick in bookings from both individual and group travelers.

• In terms of geographical dominance, the United States and Canada lead the North America hotel market due to their mature tourism infrastructure, high urbanization rates, and thriving business hubs such as New York, Los Angeles, and Toronto. These cities serve as major financial, entertainment, and cultural centers, driving significant hotel demand. Furthermore, the proximity of popular tourist destinations such as national parks and ski resorts strengthens their market position, particularly for leisure travelers.
• In response to the COVID-19 pandemic, health and safety regulations have become a priority for the North American hotel industry in 2024. The U.S. Centers for Disease Control and Prevention (CDC) continues to enforce strict hygiene and safety protocols, including regular sanitation of hotel premises and mandatory mask policies in certain regions. Hotels are required to follow cleaning protocols for public areas and guest rooms, with additional requirements for air quality management in enclosed spaces. Failure to comply with these regulations can result in fines or temporary closures, prompting hotels to invest heavily in health and safety measures.

North America Hotel Market Segmentation

By Hotel Type: The North America hotel market is segmented by hotel type into luxury hotels, full-service hotels, boutique hotels, limited-service hotels, and extended-stay hotels. Full-service hotels dominate the market due to their comprehensive offerings, which include dining, event spaces, and leisure facilities. These hotels cater to both business and leisure travelers, offering high-end amenities and services that appeal to a broad demographic. They are commonly found in major cities and tourist hubs, attracting both domestic and international visitors.

By Location: The market is further segmented by location into urban hotels, resort hotels, airport hotels, highway hotels, and suburban hotels. Urban hotels hold the largest share due to their prime locations in city centers, catering to business travelers, tourists, and event-goers alike. These hotels benefit from high foot traffic, close proximity to tourist attractions, and the presence of corporate offices, making them the preferred choice for both short- and long-term stays.

North America Hotel Market Competitive Landscape

The North America hotel market is characterized by a high level of competition, with both global and regional players vying for market dominance. Major hotel chains such as Marriott International and Hilton Worldwide continue to dominate the landscape due to their extensive global networks, loyalty programs, and continuous investment in technology and innovation. These companies also benefit from their strong brand recognition and ability to offer a range of hotel categories from luxury to budget, which allows them to cater to different customer segments.

North America Hotel Market Analysis

Growth Drivers

• Increase in Domestic Tourism: In 2024, domestic tourism in North America saw a significant boost as post-pandemic travel trends solidified. U.S. domestic travelers accounted for nearly 80% of hotel occupancy, with 25 million more room nights booked compared to 2023, according to data from the U.S. Travel Association. With many opting for closer, cost-effective travel destinations, leisure travel made up a large proportion of bookings.
• Rise of Bleisure Travel: The rise of bleisure travel, where business trips are extended for leisure purposes, has become a key trend. In 2024, over 20% of corporate bookings included extended stays for leisure, according to the Global Business Travel Association (GBTA). Corporate travelers in the U.S. contributed $328 billion in spending, showing the continued integration of business and leisure trips. Cities like New York and Los Angeles reported increased average lengths of stay, reaching an average of 5.5 nights per bleisure traveler. This growing segment is reshaping hotel offerings to cater to flexible workspaces and leisure activities.
• Growth of Short-Term Rentals and Hotel Partnerships: In 2024, hotel partnerships with short-term rental platforms surged, driven by demand for hybrid accommodation models. The U.S. Department of Commerce reported that short-term rental stays rose by 13 million nights compared to 2022, putting pressure on traditional hotels to innovate. Marriott, for example, partnered with Airbnb to offer guests the flexibility of both hotels and private stays, with occupancy rates for these hybrid models rising to 85% in metropolitan areas.

Challenges

• Inflation Impact on Hotel Operations: Inflation has impacted hotel operations, with operating costs rising sharply in 2024. According to the U.S. Bureau of Economic Analysis, hotel operating expenses grew by $22 billion due to increased energy costs, food supplies, and wages. The rise in utility bills, particularly electricity and water, added approximately 15% to the overheads of many hotels. Hotels in major cities like New York and Chicago experienced higher operating costs due to inflation, putting pressure on margins, particularly in midscale and luxury segments.
• High Maintenance Costs for Luxury Segments: Luxury hotel segments, which saw increased demand in 2024, are grappling with high maintenance and operational costs. Maintaining five-star properties has become more expensive due to rising material costs and labor shortages. A survey by the U.S. General Services Administration (GSA) reported that maintenance expenditures for luxury hotels increased by $3.5 billion in 2024 compared to 2022. This includes costs associated with refurbishments, energy-efficient upgrades, and compliance with new building codes.

North America Hotel Market Future Outlook

North America hotel market is poised to experience steady growth, driven by the continued recovery of the tourism sector, increased corporate travel, and rising consumer demand for personalized travel experiences. The integration of digital tools, such as AI for operations and booking processes, will further streamline customer service and enhance guest experiences. Additionally, the growing focus on sustainability and wellness tourism will shape future developments in the industry, with hotels increasingly adopting eco-friendly practices and offering health-centric services.

Future Market Opportunities

• Digital Transformation in Booking and Services: The North American hotel industry has seen rapid digital transformation in 2024, with online bookings accounting for over 65% of total reservations, according to data from the U.S. Department of Commerce. Hotels are leveraging digital tools such as AI-powered chatbots, mobile check-ins, and digital concierge services to enhance guest experiences. This shift is also reflected in consumer behavior, with 70% of travelers preferring hotels that offer digital services, presenting a significant opportunity for further investment in technology.
• Expanding into Midscale and Economy Segments: According to the U.S. Census Bureau, midscale hotels recorded an occupancy rate of 70%, driven by the growing number of domestic travelers opting for budget-friendly accommodations. Major chains like Hilton and Marriott have expanded their economy offerings, with Hiltons midscale brand, Tru by Hilton, adding 120 new properties in 2024. This segment is attracting a wide range of demographics, including budget-conscious families and business travelers.