The 7 travel and hospitality trends that defined 2025

While traveler behavior and spending power diverged significantly across regions, hotel technology did the opposite.

Commercial success for accommodation providers relied on securing a competitive edge. This year, that edge was forged by integrating the right technology. 

Embracing Artificial Intelligence (AI) powered, connected platforms, anchored by proprietary data sets, proved to be the clearest path to resilience and growth for forward-thinking hospitality businesses.

The need for rapid technology adoption was triggered by fundamental shifts in consumer behavior and relentless economic pressure. 

Traveler spending patterns fractured, became personalized and defined by a stark division between high-income and more modest budget-friendly segments globally. 

Persistent labor shortages and the mandate to 'do more with less' accelerated technology adoption as teams sought further efficiencies.

Adding to this complexity was the boom of the experiential economy, shifting demand toward personalized event-based trips. Simultaneously, the ubiquitous use of AI by consumers shattered the booking funnel, spreading it across a range of channels.

In 2025, consumer wanderlust remained as strong as ever, but economic realities intensified performance pressure on hoteliers. The industry responded by down on automating and innovating, so businesses could adapt and thrive once again.

1. A divergence in spending power opens up a performance gap

Tight household budgets have forced tough choices on discretionary consumer spending. But, the good news for the travel and hospitality industry? Consumers continue to prioritize leisure travel.

This demand has kept the sector somewhat healthy, even in the face of a cost-of-living squeeze.

The downside is that there are limits to this capacity and in 2025 we saw divergence in spending growth between the wealthiest consumers and the rest. 

While wealth and real-term household income growth are concentrated among the top earners, this divide has become increasingly stark. Middle- and lower-income households are not keeping pace with wage growth and are being hit much harder by inflation in essential goods like housing and food.

Moody Analytics estimates that the top 10% of Americans by annual income make up nearly half of all consumer spending currently, a major leap from the early 1990s when they accounted for 35% of spend. 

Consequently, the rising influence of high-income travelers is fueling the top end of the market, which is now outperforming mid-scale and budget segments.

According to Deloitte’s Holiday Travel Survey of US households, the end-of-year travel market is being reshaped by higher-income Americans. Their share of those planning trips between Thanksgiving and mid-January rose significantly from 38% of households over $100,000 in 2023 to 45% in 2025.

Unsurprisingly, this increasing bifurcation in spending power shows up clearly in our data as a performance gap, with five-star hotels pulling away from the four- and three-star segments.

Across nearly every global region, five-star hotels achieved superior Year-on-Year (YoY) pricing growth compared to lower tiers, with Latin America as the sole exception.

The performance gap was stark, particularly against three-star properties which saw notably weaker results. 

In Africa, for instance, the luxury segment outpaced four-star hotels by 8.6%. Even in North America, where the margin was tighter (1.4%), the trend held. 

This distinct bifurcation in spending power sets the stage for the high-end market to maintain its lead heading into 2026.

2. Even with reduced spending power, the will to travel remained

Despite the squeeze on household finances, the fundamental desire to travel remained in 2025. 

Consumers continued to value travel and to put aside spending power for trips where possible. 

Across major geographies, there was a trend to travel at the same level as last year, or even slightly more, but to do so in a more budget-conscious manner. 

In the US, Deloitte found that for the end-of-year holiday period, the share of Americans planning a trip reached more than half of their survey population for the first time since the pre-pandemic era, but the average budget had declined by nearly a fifth. 

Similarly, in China, Golden Week travel was marked by a growth in trips made, to 888 million, but the spending per person was down to its lowest point since 2022. 

Meanwhile, Europe also maintained its appeal. The ETC estimated that travel expenditure in the region accounted for 3.1% of total consumer spending, a figure that represented year-over-year growth and surpassed the long-term average from 2010 to 2019.

It has been a year of mixed fortunes. Travel demand endures but consumer priorities have shifted toward affordability. This creates a challenge for 2026. 

Revenue growth will not come from waiting for disposable incomes to recover. Instead, success hinges on mastering precision, personalization, and value to capture the budget-conscious traveler and those at the higher end who will travel regardless.

3. The US travel and hospitality market faced heavy headwinds in H2

The US market began the year on a high note, boasting strong GDP growth and an expanding travel sector. 

However, a chill has since swept through as economic conditions deteriorated and traveler sentiment of the US as a safe, accessible destination shifted. 

A confluence of factors weighed heavily on US economic and tourism sector performance throughout 2025, a trend clearly visible in our data. 

Domestically, these pressures included reduced spending power among average consumers, curtailed stimulus measures, and a lengthy government shutdown. Externally, volatile trade policy and declining international visitor numbers compounded the challenge.

Lowest actualized US hotel prices recorded by Lighthouse started above those of 2024 in Q1 2025 but have been in negative territory since. 

It is especially concerning that the worst performances recorded came in the peak summer period, where the lowest actualized prices recorded in the US across the year occurred in July 2025 at -7% YoY, followed by a -5.6% decline in August 2025.

This decline in hotel pricing power compared to last year looks set to continue for the short term as well, underlining the weakness.

Comparing prices in mid-August to those recorded in mid-November across the US shows that hoteliers are largely cutting room rates. 

Over the next 90 days (at the time of writing), prices are 6%-to-7% below where they were three months ago. This indicates a weakening demand picture forcing revenue managers to discount further. 

Consumer confidence in the US fell to a seven-month low in November and overseas visitors for the year to October were down -2.5% according to official stats. Therefore a sudden change in fortunes and momentum seems unlikely during the first half of 2026.

4. Uneven hotel pricing recovery finally takes shape in Asia 

While the US travel market sags, Asian markets are on the opposite trajectory. After a period of prolonged weakness, demand is strengthening, marked by a positive upswing in H2 2025. 

Hotel pricing charts are almost the mirror opposite of those in the US, with initially poor YoY performance in hotel rates shifting into positive territory by the final months of 2025.

Asia's export-focused economies faced significant downward pressure due to continued economic weakness in China and the impact of announced tariffs. 

This led to deep discounting across the region for much of the year, culminating in the lowest Year-on-Year (YoY) actualized pricing change in July – down by more than a quarter compared to 2024. 

However, the second half of the year brought a reversal, marked by positive pricing as economies adjusted and confidence built up.

Consumer confidence in India, Thailand and South Korea strengthened in the latter section of the year, while signs of recovery appeared among Chinese consumers. 

On the whole, Asia benefitted from the highest real wage growth rates globally in 2025, at 3.1%, nearly double the global average. These trends helped to bolster what had been a fragile regional travel market.  

In our data, the lowest actualized prices have not only pushed into positive territory, but an analysis of pricing changes for future dates also indicates growing momentum in the region. 

In December hotel rooms prices have frequently moved up by double digits compared to three months prior and were, on average, up 6-to-7% for the next 90 days at the time of writing.

This recovery, however, proved uneven. Although the UN World Tourism Barometer reported an 8% increase in arrivals across the broader Asia-Pacific over the first nine months of 2025, individual national performances differed dramatically.

Vietnam and Japan were the standout performers, with arrivals surging by 21% and 18%, respectively, and tourism spending in Japan rocketing up by 21%. Despite its strong annual performance in 2025, average hotel room rates fell by -20% across the year in Vietnam. 

Thailand continued to see fewer visitors compared to 2024 and this was accompanied by falling room prices.

In contrast, Japan was one of the very few regional markets to experience rising prices, with average rates up by 11% over the first 11 months of the year.

The unevenness and general fragility of the market highlight the ongoing challenge for Asian tourism to return to pre-2019 volumes, with genuine recovery only just starting to build momentum at the end of 2025.

5. AI makes major inroads into travel planning

Generative AI is among the fastest technologies to achieve mass adoption, with ChatGPT gaining 100 million users in just two and half months. 

Given the exponential rise of AI, its impact on travel was inevitable. 2025 confirmed this shift, seeing a significant surge in travelers using Large Language Models (LLMs) and chatbots to plan their trips

The ETC Q3 World Tourism Barometer surveyed consumers from around the world and found that the share reporting using chatbots and virtual assistants for planning nearly doubled to 18% from 10% a year prior. 

Deloitte estimated that 24% of US consumers will incorporate generative AI into travel planning during this holiday season, up from 16% in 2024. ABTA also found that usage had doubled in the UK in the space of a year, albeit it to a much lower 8%. 

This behavioral change fundamentally breaks old distribution models. 

Travel planning is merging into conversational systems, positioning the AI agent as the new gatekeeper of booking intent. 

The traditional, multi-step search is being replaced by a single, compressed booking flow, thanks to major players like Booking.com and Expedia integrating directly into AI platforms. 

Travelers simply engage the AI agent, which instantly presents bookable hotel inventory. 

This represents a seismic shift in distribution. With an estimated 40% of hotel bookings projected to pass through these environments by 2026, the entire booking funnel has shrunk, and the final choice is often made right after the AI's first response.

A significant generational divide was evident across all surveys. Younger generations are far more likely to use AI tools. ETC results showed more than triple the usage – 26% by Gen-Z and Millennials, compared to 8% among Gen-X and Boomers. 

This trend suggests AI will only become more prevalent as these younger, digital-native generations increase their earning power.

Significantly, the surge in AI tool usage (per the ETC data) coincided with a decline in travelers who said they were informed by review sites, social media, guidebooks, or personal recommendations. 

This drop, even if a temporary fluctuation, powerfully suggests that AI is replacing traditional sources of information. This fundamentally changes the game for hoteliers.

6. Revenue management gets integrated into total profit optimization

In 2025, technologies and approaches coalesced faster than ever before to support a more comprehensive approach to revenue management, driven by the realization that traditional metrics like RevPAR are insufficient for growth.

Tech integration continued its steady march. Once disparate, standalone systems (PMS, forecasting, channel management, POS) are now being merged into singular commercial platforms all running off the same data. 

This opens up the possibility of total profit optimization, allowing revenue management strategies to influence all business areas and ensuring crucial, high-level data is constantly fed back for decision-making.

The industry is shifting beyond room-centric metrics like RevPAR toward guest-centric and profit-focused metrics. Key Performance Indicators (KPIs) like Revenue Per Occupied Room (RevPOR) and Gross Operating Profit Per Available Room (GOPAR) are now paramount, revealing guest spending habits and true operational efficiency.

With centralized systems providing a single source of truth, the difficulty of implementing total revenue management receded notably in 2025. 

This gives commercial teams a complete view of the bottom line, enabling them to measure profitability per guest and align efforts with strategic goals.

7. Automation as a solution to the labor squeeze 

In 2025, a deep understanding of your business's balance sheet was essential.

Operators contended with the familiar headwinds of cost-conscious consumers while battling a continuing labor shortage.

World Travel & Tourism Council research estimates millions of unfilled positions worldwide, with industry members citing recruitment and retention as their number one problem for the year.

Deployment of automation was therefore a necessity. Whether that was at the front desk or in the commercial team. 

The biggest obstacle for commercial teams is not a lack of data, but a lack of time for strategic decision-making. This time is lost to tedious tasks like pulling disparate reports and poring over spreadsheets. 

This creates vulnerabilities. For instance, without automation in place, a surprise festival announcement late on a Saturday night can lead to rooms being sold below market rate, incurring significant loss in revenue. 

With the acceleration of AI, organizations must now invest in an integrated commercial platform, using centralized data to make proactive revenue management decisions.

By automating tedious time-eaters like report bundling and overnight change analysis, technology frees up staff to focus on strategic activities and improving the guest experience. Easing the burden of staff shortages while maximizing profitability.

While the labor shortfall may ease slightly in 2026 as labor markets soften in several major economies, labor shortages and automation can therefore be seen as long-term and persistent trends for the hospitality sector.

Actionable strategies to take into 2026

The forces driving the travel and hospitality sector in 2025 were primarily economic constraints, transformations in traveler habits, and the rapid emergence of new technologies. 

Your ability to thrive in 2026 will hinge on adapting to these challenges and taking opportunities when they arise. 

To help you adjust to these changes, we’ve included some expert advice.

Master data clarity

Abandon reliance on traditional, historical data. Success in today's unstable political and economic climate requires the use of predictive intelligence to identify opportunities and mitigate risks instantly.

Target opportunity in market bifurcation

There is permanent separation in traveler spending power. Shift strategies away from general pricing to execute precise, personalized campaigns that effectively capture high-end discretionary spending and attract value-focused travelers.

Automate to reclaim capacity

Given the continuing labor shortage, automation is key for operational survival. Utilize AI to eliminate manual data collection and analysis, freeing your commercial teams to concentrate on high-value strategy and guest experience.

Get a head start on AI distribution

LLMs are the new major player likely to dominate your distribution landscape and alter the booking funnel. While you must focus on becoming visible across AI-linked OTAs like Booking and Expedia, don’t forget your direct channel. By using infrastructure like Connect AI to feed real-time rates and structured data directly to LLMs, hotels can effectively turn platforms like ChatGPT into commission-free booking engines

Measure total asset profitability

Move beyond simple room-centric metrics. Business Intelligence is essential for integrating data, calculating Total Revenue Per Available Room (TRevPAR) and Gross Operating Profit Per Available Room (GOPAR).

Look to Lighthouse

In 2025 the hotels that understood demand earlier, adapted pricing with precision and kept their commercial systems connected had a clear advantage.

Responding decisively to market shifts depends on software that unifies data, surfaces early signals and helps teams move quickly. 

Lighthouse brings together global market data, real-time intelligence and practical AI into one place. It gives you a clearer sense of how demand is changing, how guest behavior is evolving across markets and what pricing and promotional strategy you should employ to capture it.

Whether you are an independent hotel, a short-term rental business or a global chain, this visibility helps to navigate the forces outlined in this report.

Success in 2026 requires clarity and agility. Lighthouse provides the connected intelligence needed to turn data into confident action, amidst economic uncertainty and technological disruption.

Check out our top travel and hospitality trends for 2026 to get the edge you need.