Data Courtesy of CoStar™
Despite slow growth, the Los Angeles market remains one of the nation's top-performing hotel markets in terms of occupancy and average daily rate (ADR). The 12-month average RevPAR through June changed by a modest 2.3%, with the strongest gains occurring in Q1 2025, up around 5%, driven by a surge in demand.
A significant contributor to early-year performance was the January wildfire crisis, which displaced residents and brought in emergency crews, boosting hotel occupancy. Fortunately, no hotels or key tourist destinations suffered damage, and major conferences and events continued as scheduled.
Leisure remains the dominant demand segment, with travelers drawn to iconic attractions like Santa Monica, Hollywood, and Universal Studios. However, like many US markets, Los Angeles is grappling with waning domestic leisure demand. Consumers are tightening travel budgets, shifting preferences to lower-cost options like cruises, short-term rentals, or international destinations. As a result, ADR has softened.
Compounding the issue is the incomplete recovery of international visitation. While overseas travelers once generated nearly 25% of LA's hotel room nights in 2019, that share has slipped below 20%. Inbound international travel declined further by roughly 4% year-over-year through May, closely following national trends.
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Looking forward, RevPAR is expected to grow at an average annual rate of around 3% through 2027, largely driven by ADR increases. However, mounting economic uncertainty and continued pressure on international travel pose notable risks to this forecast.
Longer-term prospects are brighter. Los Angeles is set to host several global sporting events, including eight FIFA World Cup matches (2026), the NBA All-Star Game (2026), Super Bowl LXI (2027), and the Summer Olympics (2028)—which are expected to drive significant future demand.
On the supply side, development has slowed. About 2,100 rooms across 15 hotels are under construction, equating to a 1.8% increase in inventory through 2028, down from 4,400 rooms added over the past three years.
Investment activity has also cooled. Since the enactment of the city's “Mansion Tax” in April 2023, only eight hotel properties priced above $20 million have sold. Over the last 12 months, total sales volume reached $382 million, well below the prior three-year annual average of $745 million.
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