Navigating complexity: How Latin America’s hotel prices are finding new balance

The uniform, leisure-led gains of recent years have fractured. Luxury, corporate and budget hotels now follow sharply different trajectories, each shaped by distinct demand drivers.

What matters now: domestic economic resilience, US traveler exposure, climate and currency vulnerability, and the rising strength of midscale segments.

This analysis draws on comprehensive Lighthouse pricing data to explore why 2025 marked the end of a cycle, and why the next 12 to 18 months demand a far more granular approach to revenue strategy.

The 2025 correction

2024 reached an unsustainable peak, fueled by the finite "revenge travel" phenomenon and inflated by short-term gains in both the luxury and midscale sectors. 

Lighthouse data shows regional average pricing spiked in March 2024 with a 12% YoY jump, fueled by extraordinary growth in 5-star (+32%) and 3-star (+42%) segments. 

The region’s average price climbed to USD 248 in 2024 before declining to USD 229 by 2025, with projections showing stabilisation near this level into 2026. This plateau represents a return to market fundamentals after the exhaustion of pent-up demand – a rational normalization as traveler price sensitivity returns.

The divergence is clearest in the luxury segment. Trailing Twelve Months (TTM) pricing data shows an aggressive, leisure-fueled ascent from USD 187 in January 2021 to a peak of USD 350 by January 2025.

However, this ascent gave way to notable corrections. While absolute 5-star rates remain high and far exceed other segments, 2025 sees dramatic YoY drops, including -34% in June and -33% in July compared with the same months in 2024.

This indicates the 5-star segment is transitioning from an unprecedented growth phase to one of normalization and correction. Nevertheless, 5-star hotels remain among the best-performing segments in terms of overall price levels and demand stability.

By contrast, the 4-star segment exhibited measured, sustained growth. Prices rose just 1% in 2025 YoY, supported by value-conscious travelers and resilient domestic demand.

This divergence between cooling luxury prices and steady midscale growth reflects a natural market rebalancing after an unsustainable luxury surge, while the midscale strength underscores the ongoing importance of value-driven demand in Latin America.

Market highlights by country

Mexico hotel pricing

Mexico illustrates this trend clearly. The 5-star average rate softened by 5% compared with 2024, while 4-star and 3-star segments posted modest gains of 1% each. Urban and business centers shone amid the national softness:

• Mexico City saw an 8% YoY average price gain.

• Luxury 5-star hotels increased by 11%.

• Midscale 4-star and economy 3-star segments both grew by 9%.

Conversely, Mexico's leisure and coastal corridors, which enjoyed a post-pandemic boom, normalized in 2025 with price corrections reflecting renewed traveler price sensitivity:

• Cancun saw a -6% decline in 5-star pricing compared to 2024.

• Los Cabos and Riviera Maya were down -1% and -2% YoY, respectively, in the luxury segment. 

• Midscale 4-star and economy 3-star segments in these Mexican beach destinations demonstrated resilience, maintaining or slightly increasing rates, buoyed by shifting consumer preferences toward value. 

Brazil hotel pricing

While most of Latin America moderated, Brazil’s hotel sector emerged as a regional outlier in 2025, navigating the normalization trend with surprising resilience. Full-year Lighthouse data shows Brazil’s average hotel pricing grew 3% over 2024, notable for its consistency across market segments: 

• 5-star (+3%, to USD 252)

• 4-star (+7%, to USD 98)

• 3-star (+3%, to USD 63)

Standout secondary and leisure destinations delivered the biggest gains: 

• Gramado led with an extraordinary 46% in average pricing, a surge largely attributed to a rebound from the significant travel disruption caused by heavy rainfall in 2024.

• Florianopolis (+19%) and Maceio (+18%) also posted dramatic year-on-year increases.

Major urban markets also performed well, though with a more measured pace of growth. 

São Paulo’s 6% average room price growth in 2025 encapsulates this trend, driven entirely by the upper end: the city’s luxury (5-star) segment jumped 7%, while midscale and economy hotels were flat or down slightly, underscoring the nuanced segment- and event-driven character of Brazil’s recovery. 

Strategic events like the Formula 1 Grand Prix in November delivered a sharp national pricing spike (+20.8% YoY), reinforcing Brazil’s advantage: a strong domestic base, diversified demand, and a robust events calendar that supports consistent compression.

Regional snapshots

In Peru, two factors stand out:

• The Cusco market surged early in the year, with H1 average rates up 11% YoY and a standout April performance, up 31% YoY. Strong July and August growth suggested continued momentum, but September’s political protests reversed that trend.

• Since then, rates have dropped an average of -7% compared to the same post-summer period in 2024, underscoring the fragility of rate growth when dependent on volatile local conditions.

• Secondly, Lima's overall price growth in 2025 was punctuated by a dramatic, short-term price spike in late November. The 2025 CONMEBOL Copa Libertadores Final – an all-Brazilian event set to draw tens of thousands of high-spending fans – triggered a compression event that lifted November’s average rates by 32% YoY. 

• Advertised rates for the night of the final jumped 14% in just two weeks, showing how single events can still deliver outsized pricing power – if identified and leveraged early.

Argentina, meanwhile, is undergoing one of the region’s sharpest corrections. As the country stabilizes economically, the "cheap destination" arbitrage that powered 2023 demand has faded. 

• Nationally, hotel rates are down -12% in 2025.  

• 5-star rates dropped -15% YoY to USD 247, while 4-star rates are down -7% YoY.

• The 3-star segment, at -2% YoY, indicates some resilience in value-focused domestic demand.

Buenos Aires mirrors this pattern with a -12% YoY decline (from USD 163 to USD 141), with advertised pricing for the first quarter of 2026 still pacing below what it was at the same point in 2024 for the first quarter of 2025. 

In the Caribbean, small, luxury-focused destinations such as St. Lucia and Turks & Caicos continue to push prices upward at double-digit rates, supported by a thin supply base and a customer segment largely insensitive to rate increases. 

• St. Lucia records the strongest increase, with 5-star prices up 36% YoY to USD 980. 

• Turks & Caicos also posted a double-digit rise, with 5-star rates up 15% YoY to USD 1,168. 

More diversified, high-volume destinations – most notably the Dominican Republic – are moving in the opposite direction, with 2025 pricing softening as supply growth and post-pandemic normalization erode the premium achieved in 2023–2024. 

• Punta Cana’s average price fell -7% in 2025 to USD 467

• Advertised 2026 rates for Punta Cana dropped further to USD 395 (a -16% year-on-year decline), confirming downward momentum.

Jamaica sits between these two poles: it delivered strong 2025 gains but saw its momentum interrupted by Hurricane Melissa, leaving 2026 prices essentially flat rather than discounted. 

Barbados shows yet another pattern, with 2025 average rates down -10% year-on-year, but 2026 pricing is projected to rise sharply by roughly 24%, signaling confidence for the upcoming high season.

Looking ahead: pricing into 2026

With 2025 showing clear signs of normalization, the forward-looking data for 2026 reveals early indicators of where confidence is building and where caution remains. 

Looking ahead to 2026, it is the urban centers, specifically São Paulo, Mexico City, Bogotá, and Lima, that are setting the pace. Their first-quarter pricing is currently trending slightly higher than it was in 2025. Strong local interest, corporate travel, and a busy event calendar help these markets maintain stable prices, even as travelers become more sensitive to cost.

Leisure destinations continue to soften. In Punta Cana, advertised rates for 2026 are roughly -15% below 2025 levels, pointing to sustained pricing pressure in oversupplied and price-sensitive markets. Similar patterns can be seen in parts of Mexico’s coastal corridor, where rate corrections are continuing into the new year.

Argentina’s numbers point to a mixed year: the first four months sit close to 2025 levels, while May–October suggest notable 10–30% increases, led by midscale and value segments. The 5-star segment is more gradual, with advertised rates ramping up from July 2026. 

Across the region, forward-looking pricing data suggests that 2026 will reward revenue strategies that are highly localized, segment-aware, and responsive to fast-changing conditions.

What does this mean for hoteliers?

The uniform recovery is over. What follows is fragmented, fast-moving and unforgiving of broad-brush tactics.

Revenue leaders who outperform in 2026 will be those who treat each market on its own terms. What works in Mexico City may falter in Cancun. What holds in São Paulo could unravel in Gramado. Precision beats instinct. Flexibility beats formula.

Lighthouse gives you 365 days of forward-looking pricing and demand data, so you can spot shifts early, act decisively and stay ahead of markets that won't wait.