Phoenix, Arizona, October 14, 2025
News Summary
The hotel industry faces significant challenges with tariffs and reduced traveler numbers in 2025. Key leaders at the Lodging Conference in Phoenix discussed the impact of geopolitical tensions and high-interest rates on development. Despite these hurdles, there is optimism for growth, particularly in international markets like Canada, with opportunities arising from the current economic climate. Developers are encouraged to pursue new constructions, focusing on upscale and extended stay segments, as the market stabilizes and potential refinancing opportunities emerge.
Phoenix, Arizona – The lodging industry is grappling with significant challenges in 2025 as hotel developers face tariffs, reduced traveler numbers, and geopolitical tensions. Despite these hurdles, prominent industry leaders convened at the Lodging Conference in Phoenix, discussing not only the issues at hand but also the opportunities for growth in the evolving market.
Chief development officers from major hotel chains—including Hilton, IHG Hotels & Resorts, Choice Hotels International, Hyatt, and Wyndham Hotels & Resorts—shared their perspectives on the current state of the industry. The first eight months of 2025 have proven difficult for hotel developers, cited primarily due to tariffs and high-interest rates affecting financing options.
Hyatt’s Head of Americas Development specifically noted the impact of tariffs, rising interest rates, and ongoing geopolitical concerns as significant issues that have affected industry operations. These factors have created an environment where anticipated interest rate reductions have been delayed, as pointed out by Choice Hotels’ Chief Development Officer. The skepticism triggered by actions from the second Trump administration early in the year has also dampened industry optimism, according to Wyndham’s chief development officer.
Yet, amidst these challenges, a sense of optimism persists. IHG Hotels’ representative highlighted that even with the downturn, unique opportunities for international market growth, particularly in Canada, are emerging. Notably, Choice Hotels recently acquired the remaining 50% of Choice Hotels Canada, setting the stage for substantial expansion in a market seeing an increase in RevPAR (revenue per available room) due to an undersupplied market.
As the current economic climate allows for potentially lower entry costs, hotel developers who navigate this downturn strategically may find themselves leading in a recovery phase. The sentiments reflect a focused perspective that locations near AI data center investments might yield significant growth opportunities.
The upscale and extended stay segments of the market are considered poised for growth as well. Developers with available capital are encouraged to pursue new constructions, positioning themselves to benefit from future market rebounds that typically favor newer establishments. Construction also presents refinancing opportunities as the market stabilizes. Following the Federal Reserve’s decision to cut its benchmark interest rate by 25 basis points on September 17, 2025, further deal activity across the industry is expected to increase.
In terms of overall supply, Hilton forecasts moderate supply growth in the hotel sector for the upcoming year. Yet a recent survey by the American Hotel & Lodging Association indicated that rising costs and demand challenges are motivating many hotel owners to delay or cancel their development projects.
Highlighting regional development, the Lodging Econometrics report revealed Dallas leading the U.S. hotel construction pipeline with a total of 203 projects. Following Dallas are Atlanta, Nashville, Phoenix, and Austin, showing robust project volumes and year-over-year growth. Prominent upcoming hotel completions in Phoenix include the Candlewood Suites Mesa and VAI Resort, which will collectively add 1,100 rooms to the market. Additionally, Phoenix Development Group is working on a 264-room dual-branded hotel in Uptown Dallas, anticipated to be finished by summer 2026.
Conclusion
In summary, while the hotel industry faces numerous economic challenges in 2025, key players are identifying opportunities for growth in specific markets and segments. With careful planning and investment, the lodging sector remains poised for a recovery phase that could bring future prosperity.
FAQ Section
What challenges are hotel developers facing in 2025?
The first eight months of 2025 have been challenging for hotel developers, marked by tariffs, a lack of travelers, and geopolitical tensions.
What insights were shared by industry leaders at the Lodging Conference?
Chief development officers from Hilton, IHG Hotels & Resorts, Choice Hotels International, Hyatt, and Wyndham Hotels & Resorts shared insights during the Lodging Conference in Phoenix.
How are tariffs affecting the hotel industry?
According to the speakers, tariffs have delayed anticipated interest rate reductions, impacting financing for hotel developments.
What market opportunities are available despite current challenges?
The downturn presents unique opportunities for growth in international markets, particularly Canada, as markets are seeing double-digit RevPAR increases due to an undersupplied market.
What areas of hotel development are projected for growth?
The upscale and extended stay segments are projected as strong areas for growth.
Key Features Summary
| Feature | Details |
|---|---|
| Challenges Faced | Tariffs, reduced travelers, and geopolitical tensions |
| Key Insights from Leaders | Mixed feelings of concern and optimism for future growth |
| Market Opportunities | Growth potential in international markets, particularly Canada |
| Projected Growth Segments | Upscale and extended stay properties |
| Construction Trends | Strengthening development in markets near AI investments |
| Future Potential | Possibility for favorable refinancing as market rebounds |
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Additional Resources
- Hotel Dive: Hotel Development Trends
- AZ Big Media: Phoenix Hotel Construction Pipeline
- KTAR: Costco TSMC Business Development
- AZ Central: Costco and Hotel Development in Phoenix
- Rebusiness Online: Construction of Dual-Branded Hotel in Dallas
- Wikipedia: Hotel Industry
- Google Search: Hotel Development Trends
- Google Scholar: Hotel Development
- Encyclopedia Britannica: Hotel
- Google News: Hotel Industry News
Author: STAFF HERE PHOENIX WRITER
The PHOENIX STAFF WRITER represents the experienced team at HEREPhoenix.com, your go-to source for actionable local news and information in Phoenix, Maricopa County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Waste Management Phoenix Open, Cactus League Spring Training, and Arizona State Fair. Our coverage extends to key organizations like the Greater Phoenix Chamber of Commerce and Visit Phoenix, plus leading businesses in technology and healthcare that power the local economy such as Intel and Banner Health. As part of the broader HERE network, including HERETucson.com, we provide comprehensive, credible insights into Arizona's dynamic landscape.
