Data Courtesy of CoStarâ„¢
Los Angeles remains one of the country's strongest hotel markets by both occupancy and pricing, though performance has clearly cooled from the rapid gains seen earlier in the year. For the 12 months ending December 2025, RevPAR was essentially flat, changing by -0.1%, signaling a clear deceleration from earlier momentum.
Results were heavily front-loaded. During the first half of 2025, RevPAR rose by approximately 4%, boosted by an unusual spike in demand linked to the January wildfire emergency. Widespread displacement and the influx of first responders and support personnel temporarily lifted midweek occupancy and filled a broad range of hotel classes. That one-time tailwind faded as the year progressed, and performance softened amid heightened economic uncertainty, slower corporate travel activity, and more restrained consumer spending, pressures that were most evident during the late summer travel season.
Looking ahead, Los Angeles retains a rare advantage in its slate of globally significant events. Between 2026 and 2028, the region is scheduled to host eight FIFA World Cup matches, the NBA All-Star Game, Super Bowl LXI, and the Summer Olympics. These events are expected to create substantial compression across the lodging market, supporting outsized ADR gains during peak periods and lifting overall RevPAR. Forecasts call for average annual RevPAR growth of roughly 3% to 4% through 2028. Even so, the outlook carries meaningful downside risk, tied primarily to macroeconomic volatility and the slower-than-expected recovery in international travel.
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Leisure travel continues to anchor demand, supported by globally recognized destinations including Santa Monica, Hollywood, Beverly Hills, and Universal Studios. However, traveler behavior is evolving. Inflationary pressures and higher interest rates have made consumers more price-conscious, prompting a shift toward alternatives such as short-term rentals, cruises, and closer-to-home trips. This dynamic has limited rate growth, particularly during the summer months when Los Angeles faces stiff competition for international visitors. International inbound travel has yet to fully recover, as overseas guests accounted for nearly 25% of room nights in 2019 but remain below 20% of total demand in 2025, with arrivals down approximately 6% year-to-date through December.
Development activity has also moderated. Approximately 2,300 rooms across 19 projects are currently under construction, equating to a 2.0% inventory increase through 2027. This marks a sharp slowdown compared with the roughly 3,700 rooms delivered over the prior three years, reflecting elevated construction costs, regulatory complexity, and tighter financing conditions.
Investment activity remains muted. The transfer tax enacted in April 2023, often referred to as the “Mansion Tax”, imposes a 5.5% levy on transactions above $10 million within City limits, materially increasing deal friction for institutional-scale assets. Since its implementation, only four hotels above that threshold have traded. Total transaction volume over the past 12 months reached $353 million, well below the three-year annual average of $508 million. While LA remains a long-term magnet for global capital, the near-term environment is defined by limited deal flow and compressed valuations.
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