Originally seen HERE.
Major markets drive group demand growth, though infrastructure projects fuel demand at economy, midscale brands.
U.S. hoteliers are forecasting higher group sales for 2025.
Demand growth from the tech, medical and healthcare industries are driving larger bookings at resorts and upscale properties while construction and infrastructure activity spurs more group business at midscale and economy hotels across the hotel industry’s major brands.
“Technology, finance and professional services continue to drive strong engagement, and we’ve seen positive sentiment from corporate and association meeting planners,” said Mark Sergot, senior vice president of global sales at IHG Hotels & Resorts.
Marriott International, Hilton and Hyatt Hotels Corp. all projected higher 2025 group bookings on their earnings calls in February. Executives at IHG Hotels & Resorts and Wyndham Hotels & Resorts, as well as resort specialist Peregrine Hospitality also indicated that group sales were on the upswing.
Marriott International’s booked group revenue, which was up 8% last year and accounted for almost a quarter of the company’s booked room nights, was “pacing up 6% for 2025” as of the end of last year, CEO Tony Capuano said on his company’s earnings call.
Hyatt’s pace of group bookings for 2025 was up 7% from a year earlier. Demand has been driven in part by Easter taking place this year in April instead of March last year, Hyatt CEO Mark Hoplamazian said last month on Hyatt’s earnings call. He also pointed to January’s inauguration festivities as a boost to 2025 group business.
There appears to be little concern from hotel companies that the Trump administration’s plans to reduce federal spending would put a crimp on group demand.
“Business travel is getting back to the new normal,” said Angie Gadwood, senior vice president of sales at Wyndham. “We’re seeing healthy trends.”
Hoteliers are still optimistic that group demand across the U.S. hotel industry will continue to grow throughout the year despite the rhetoric coming out of Washington.
Gadwood said much of the infrastructure projects that drive Wyndham’s group business are funded all or in part by the federal government. She was slightly more guarded, saying that the company was “full-speed ahead and encouraged but cautious.”
Peregrine Hospitality Chief Operating Officer Pete Sams, however, said he was confident that a new presidential administration looking to put memories of the pandemic in its rearview mirror would be a net positive for hotels banking on more group demand.
“One element is this return-to-office environment led by the change in approach with the new administration in D.C.,” Sams said. “Some of that is mandated on the federal level, but a lot of industry is following suit.”
Group sales at resorts appear to be growing the fastest. Peregrine Hospitality, which has a portfolio of larger hotels including the Sheraton San Diego as well as resorts such as Napa Valley’s Silverado Resort, is projecting 2025 group revenue to increase 18% from a year earlier. The company’s volume of lead calls is up 25%, according to Chris Riccardi, Peregrine’s senior vice president of global sales strategy.
Hoteliers’ expectations for group business are consistent with industry forecasts that group business will spur higher U.S. room demand for the remainder of the year. U.S. revenue per available room will grow 2% this year primarily on higher demand within the larger U.S. markets, according to a February report from CBRE.
“The U.S. hotel market is poised for steady growth in 2025, primarily led by continued outperformance of the urban segment,” Rachael Rothman, CBRE’s head of hotel research and data analytics, said in a statement. “The sector’s resilience and the sustained demand for higher-priced hotels bode well for the upcoming year.”
Hotel operators are hoping for a reprieve of sorts in the form of higher group demand after a year where overall hotel demand had its slowest growth since the pandemic. After advancing 4.3% in 2023, U.S. RevPAR growth slowed to 1.8% last year, as room rates increased 1.7% and occupancy remained flat at 63%, according to CoStar.
Yet, many of the U.S. cities that regularly attract groups and conventions outperformed the overall market. Full-year RevPAR in Chicago and New York was up 8.3% and 9.2% year over year, respectively. Across the top 25 U.S. hotel markets, group RevPAR rose 5.8% in 2024 year over year.
What groups want from hotels
Wyndham’s Gadwood said she expects the increase in group business to go beyond the country’s largest cities. Last year, Wyndham debuted its economy extended-stay brand Echo Suites in South Carolina and has more Echo Suites properties in development in Texas and Tennessee with the expectation of increased spending in infrastructure and the build-out of data centers nationwide.
Hotels in this segment could house groups of workers contracted to these job sites for as long as a year. These groups of hotel guests desire amenities that are more built-in on-property, including on-site laundry facilities, in-room cooktops and the option to purchase the cookware that’s included in the rooms, she said.
Meanwhile, in the higher-end hotel segments of upper upscale and luxury, meeting planners and large groups continue to expand their amenities wish lists in what they’re looking for from hotels. On the higher end, the emphasis is on wellness amenities and specifically local experiences. Frank Passanante, Hilton’s senior vice president and global head of sales, said more groups expect a wider range of food and beverage options, including menu items that account for people with allergies, and a wider range of non-alcoholic beverages.
But the amenities hotels provide get more specialized with higher-end groups. On the wellness front, Riccardi said Peregrine has received requests for “quiet rooms” where business guests can temporarily find refuge, as well as “recovery rooms” with air-compression products that are designed to reduce muscle tension.
Peregrine’s hotels and resorts also provide unique local experiences depending on the market and type of group. Paso Robles Inn in Central California has provided cowboy-hat fittings for some groups, while use of the Sheraton San Diego’s Airstream trailer — which has been retrofitted to include a coffee bar and looks out over San Diego Bay — is another perk.
Meanwhile, technology upgrades such as high-definition streaming of off-site presenters on LED screens has become a regular ask of hotels from meeting planners.
