Global Hotel Rates: Q4 2025 Market Outlook

The 2024–2025 period experienced a notable deceleration in market growth. The global hotel market has entered a period of price normalization, where the easy gains of recent years have faded and operators are navigating a more uneven landscape.

Rates are no longer rising everywhere at once; instead, we see sharp regional corrections, stable but subdued averages in mature markets, and isolated hotspots of strong growth.

What stands out most in the data is a pattern of divergence: between luxury and budget, between hubs and leisure destinations, and between countries within the same region.

This report breaks down those shifts, explaining where pricing power is holding, where it has eroded, and where hoteliers are pushing aggressively into year-end.

Global themes

1. Normalization – Across regions, rolling 12-month growth is flat or negative. The era of broad-based rate surges has ended.

2. Segment splits – Luxury hotels generally protect rate levels, while 3- and 4-star properties have seen most of the decline. But in Oceania, luxury is leading the downturn, showing the pattern isn’t universal.

3. Late-year positioning – Many markets are pacing ahead for Q4, with hotels actively testing the limits of price increases to see how much demand can withstand.

Africa

The African hotel market has undergone the steepest correction globally. The regional rolling 12-month average dropped from $201.19 in August 2024 to $161.28 by August 2025, representing a decline of 19.8%.

The contraction is concentrated in the 3- and 4-star tiers. In early 2025, monthly year-over-year rates fell by around -15% for 4-star hotels and -23% for 3-star hotels compared with the same months in 2024.

Luxury 5-star properties were more insulated, with rates broadly stable in the mid-$350s.

For much of the period their year-over-year growth was positive, but by August 2025 the rolling 12-month average had edged slightly negative (-1.1% vs. the equivalent period in 2024).

Year-end outlook: mixed signals

Heading into the final quarter of 2025, advertised rates show a mixed picture. December rates for 4-star hotels are pacing only +0.9% above December 2024 actuals.

More recently, in the past 30 days, 3-star hotels have pushed Q4 rates up by +7.5%, while both 4-star (-1.5%) and 5-star (-1.3%) segments have eased back.

Regional divergence

Geographically, the picture is uneven.  The steepest annual declines are concentrated in Eastern and Southern Africa.

Kenya's average rates for 2025 are 22.2% lower than in 2024, Botswana down 26.6%, and Nigeria down 12.4%. Ghana and Ethiopia show the sharpest contraction, with 2025 averages down 42.2% and 31.1% year over year respectively

North Africa is moving in the opposite direction. Egypt's 2025 average rates are 10.3% higher than 2024, and Morocco is modestly positive at 2.4%.

South Africa (-0.2%) is broadly flat on a full-year basis, but its two largest urban markets are stronger in the forward-looking data: Cape Town’s advertised rates for Q4 2025 are pacing +26.0% above Q4 2024, while Johannesburg is pacing +23.6%, supported by event-driven demand such as the G20 summit in November.

Asia

Asia’s hotel market has lost momentum after early signs of growth in 2024. Average monthly rates peaked at $171.71 in February 2024 during Lunar New Year demand, before sliding to $123.23 by September 2024. By August 2025, the rolling 12-month average rate for the region was -17.8% lower than in the same 12-month period a year earlier.

Segment divide

Segment performance shows a similar divide. As of August 2025, luxury hotels were relatively resilient, with rolling 12-month average rates -4.2% lower than in the equivalent period ending August 2024. Mid-market properties were weaker, with 4-star hotels -6.1% lower and 3-star hotels -16.3% lower on the same rolling comparison.

At the country level, full-year 2025 averages compared with 2024 highlight stark differences. Japan is the only major market with full-year 2025 rates higher than 2024, up +6.0%.

Elsewhere, full-year averages are sharply lower: China -25.6%, Indonesia -27.3%, India -16.7%, Vietnam -22.8%, Singapore -13.1%, and Thailand -4.8%. 

Q4 outlook: winners and losers

Forward-looking advertised rates for Q4 2025 compared with Q4 2024 (STLY) reinforce this divide. In Japan, cities such as Kyoto, Osaka, and Okinawa are pacing +10–20% higher than the same quarter last year.

In India, Jaipur (+29%) and Chennai (+28%) are also pacing well ahead of last year, while in Thailand the resort market of Krabi is pacing +18% higher.

By contrast, in China, Beijing is pacing -17.8% below last year’s Q4, Shanghai -13.6%, and in South Korea, Seoul is pacing -9.4% lower for Q4 2025. Indonesia shows similar softness, with Bali’s key resort areas like Ubud (-8.1%)and Seminyak (-10.2%) advertised rates below Q4 2024 levels.

Recent momentum

Recent pricing activity suggests a degree of renewed confidence. In the past 30 days, advertised rates for Q4 2025 have been pushed up an average of +8.0% compared with Q4 2024.

The luxury tier leads with +8.6%, followed by 4-star (+4.8%), while 3-star hotels are more cautious, up just +1.2% in the same period.

Europe

Europe’s hotel market remains in positive territory, but growth has slowed. As of August 2025, the average rate over the prior 12 months was $173.35, up +3.2% compared with the 12 months ending August 2024 ($167.97). This is well below the pace seen earlier in the cycle – for example, in January 2024 the 12-month average was running +11.3% above January 2023, underlining how much the broad acceleration has eased.

Segment performance

As of August 2025:

• 4-star hotels averaged $176.52, up +4.9% versus the equivalent period ending August 2024.

• 5-star hotels averaged $353.58, up +4.3% year over year.

• 3-star hotels averaged $128.60, up +1.9% on the same rolling comparison.

A tale of two halves

Monthly data shows 2025 split into two distinct halves. Q1 was weak (rates down -4.2% in January, −2.3% in February, -2.2% in March), before momentum returned from April (+4.6%) and accelerated in May (+12.5%). Growth then held strong through the summer. Luxury hotels led the rebound, with 5-star rates climbing +8.9% in June, +10.8% in July, and +9.3% in August.

Looking ahead, however, 3-star hotels are positioned for a stronger finish: December 2025 rates are currently advertised +17.95% above December 2024 actuals, suggesting operators anticipate strong value-driven demand.

Country-level winners

Performance varies widely by country. Iceland posted one of the strongest YoY gains with 2025 average rates at $303.18, +19.5% higher than in 2024. Latvia rose +16.78.% to $121.75, albeit from a lower base. 

Among larger markets, Austria (+8.2%) and Greece (+6.7%) also performed strongly, as did Croatia (+8.2%), Norway (+5.8%) and Sweden (+5.8%). 

Meanwhile, other major destinations in Europe saw more modest growth:

• France +2.4%

• Netherlands +1.7%

• Spain +1.4%

• United Kingdom +1.4%

Italy is the only major tourism powerhouse in decline, with 2025 average rates -5.7% lower than 2024, reflecting a correction after steep increases in the prior two years.

Q4 outlook: diverging city performance

Forward-looking data shows further divergence. Looking ahead, December 2025 advertised rates are currently +12.7% higher than actual rates for December 2024.

• Germany shows broad-based strength, with advertised rates for Q4 2025 pacing significantly above Q4 2024 in Dusseldorf (+29.0%), Cologne (+18.0%), Bonn (+16.7%), Dortmund (+15.3%), Frankfurt (+14.4%), and Heidelberg (+12.2%). Berlin's advertised rates are 8% higher than in 2024, while Munich is experiencing only a 0.3% growth.

• Weaker hubs include Venice (-9.3%), London (-3.9%), Manchester (-3.1%), Belfast (-6.3%), Helsinki (-2.9%), and Lisbon (-2.1%).

• Mediterranean leisure destinations remain outliers, with extended high-demand seasons. Crete is pacing +31.2%, Marbella +25.4%, Cannes +18.8%, and Nice +17.6%.

• Ultra-luxury markets are even stronger: the Sorrento–Amalfi Coast is pacing +35.9% above Q4 2024, with rates also pushed +14.8% higher between the first week of August and the first week of September for stay dates in Q4.

Latin America

Latin America’s hotel market peaked in early 2024, with average rates above $300 in March. Since then, the region has entered a correction.

By August 2025, average rates over the past 12 months were -3.8% lower than the same period a year earlier.

Luxury leads the decline

The adjustment has been sharpest in the luxury segment.

Five-star properties saw rates fall by as much as -25.3% year over year in June 2025, and advertised December 2025 rates remain -22.4% below December 2024.

Mid-market rebound

Mid-market hotels show a two-phase story. Four-star properties were 5–12% below 2024 levels in the first half of 2025, but have since rebounded strongly. December 2025 rates are pacing more than +20.3% higher than the same month last year. 

The 3-star segment has been more volatile. December 2025 advertised rates are pacing +1.4% above December 2024, but in the last 30 days, operators have cut rates for those dates by -3.6% to secure volume. Meanwhile, 5-star rates rose +5.5% and 4-star +4.9% over the same period.

Broad-based downturn

The downturn is broad-based. Across the full year, average rates in the Dominican Republic are -17.1% lower than in 2024, Turks and Caicos -10.8%, and Barbados -9.1%.

The larger continental markets also show declines, with Mexico down -9.0%, Colombia -11.1%, Argentina -12.7%, and Brazil -0.7% compared with last year’s averages. 

A few markets stand out on the upside: Guyana (+25.6%) and Paraguay (+11.7%) have recorded annual growth, while Jamaica (+13.7%) is the only major leisure destination in the region showing higher average rates than in 2024.

Q4 outlook: Caribbean weakness, Brazil strength

Advertised rates for Q4 of 2025 show a more mixed picture. Several Caribbean hubs are pacing behind the same period last year, including Punta Cana (-17.8%), Tulum (-17.3%), Riviera Maya (-13.2%), and Cancun (-10.2%). 

Brazil is the outlier, with strong advertised gains in domestic markets such as Gramado (+51.3%), Balneário Camboriú (+31.0%), and Porto Seguro (+24.6%).

Colombia’s major cities are also on track for a strong finish, with Medellín (+17.4%), Bogotá (+14.0%), and Cartagena (+9.8%) all pacing well above Q4 2024.

Middle East

The Middle Eastern hotel market has experienced a mild correction compared with other regions. As of August 2025, average rates over the past 12 months were -2.6% lower than in the same period a year earlier.

Segment performance: luxury holds firm

The 12-month view shows a clear split. Five-star hotels are +1.4% higher than the prior 12-month period, underlining their resilience. Four-star properties are -0.8% lower, a modest decline. Three-star properties are down -8.4%, showing that most of the pressure is concentrated in the budget tier.

Two dynamics frame this picture. First, the correction fits the region’s normal seasonal pattern of strong first and fourth quarters and softer middle months.

Second, the price gap between segments is unusually wide: As of August 2025, 5-star hotels averaged $235.00 compared with $122.50 for 4-star properties – a +91.8% premium. Luxury strength therefore, isn’t enough to offset weakness further down the chain.

Recovery from Q1 weakness

Across the region, conditions were weakest in the first quarter of 2025, with year-over-year declines as steep as -7.2% in March. From April onward, rates stabilized, with June only -2.0% below June 2024, and the second half of the year trending more positive.

Country performance

Looking at country averages for the full year 2025 compared with 2024, most major markets are trending down.

The United Arab Emirates is -5.4%, Saudi Arabia -7.5%, Qatar -4.2%, and Turkey -1.8%. Azerbaijan is down -15.4%, largely due to the one-off spike in demand from COP29 in November 2024.

Year-end momentum builds

Forward-looking data shows a more positive picture. December 2025 advertised rates are pacing +8.6% above December 2024 actuals. 

The 3-star tier in particular has shifted sharply: after double-digit declines earlier in the year, 3-star hotels are now advertising December rates +35.4% ahead of last December.

Four-star hotels are pacing +13.4% higher. In the past 30 days alone, 3-star advertised rates for Q4 have increased by +20.2%, suggesting operators are testing the market’s tolerance for higher prices as year-end approaches.

North America

North America’s hotel market has flattened out after several years of strong growth. As of August 2025, average rates over the past 12 months are -2.5% lower than in the same period a year earlier, reflecting a mild year-over-year contraction.

Segment performance: luxury leads

By segment, performance is relatively uniform. Five-star hotels are +1.7% higher than the prior 12-month period, the strongest of the tiers. Four-star properties are nearly flat (+1.0%), while three-star hotels are -1.5% lower.

The wide price gap between tiers remains: 5-star properties average $456.11, more than double 4-star rates ($219.67), which in turn are over 50% higher than 3-star rates ($141.35).

Steady improvement through the year

The North American market has shown a pattern of steady improvement throughout the year. The year began with year-over-year declines, with the regional average bottoming out at -6.3% in April.

These declines softened progressively, reaching near-flat levels by the end of the third quarter. The outlook for the end of the year turns positive, with advertised rates for December pacing +2.6% ahead of 2024.

However, there is some divergence between the tiers. The 5-star luxury segment has been the clear outperformer all year, posting positive year-over-year growth in almost every month, including a strong +4.0% in August. 

By contrast, the 4-star tier has oscillated between small gains and losses, ending August +2.5% YoY but slipping again into negative territory by autumn.

The 3-star tier has shown less volatility but more persistent weakness, with most months below 2024 levels.

Q4 outlook: luxury drives momentum

Heading into Q4, despite the overall market's flatness (down 0.3% over the last 30 days), the 5-star segment is driving positive momentum for the rest of 2025, with operators pushing rates up by 2.1%.

The 4-star (-2.2%) and 3-star (-0.8%) segments have both seen slight downward price adjustments in the same period.

The downturn for the full year is consistent across the region’s two major markets. The United States is pacing −2.6% lower on average in 2025 compared with 2024, while Canada is slightly more resilient at −0.9%.

U.S. cities: fragmented picture

At the destination level, forward-looking data for Q4 2025 shows a fragmented picture across the United States. 

San Francisco stands out as the strongest outlier. Advertised rates for Q4 2025 are pacing +18.9% above Q4 2024, a jump that reflects both recovery from last year’s weak base and a change in recent booking trends.

In the latest window, rates for Q4 stays rose +1.1% between early August and early September 2025, whereas in the same period last year they fell −3.4%. That shift leaves average advertised prices at $207.68 in September 2025 compared with $174.36 a year earlier.

Advertised rates for Q4 show that New York is pacing -4.0% below the same period last year, though the month-to-month increases since August (+1.5%) suggest operators are beginning to lift rates again.

Los Angeles and Washington, D.C. continue to face pricing pressure. Los Angeles is pricing 8.0% below Q4 2024, with September advertised rates at $218.40 compared to $237 in 2024. Washington, D.C. is pricing 10.8% lower than the same period in 2024, with Q4 2025 advertised rates decreasing by 2.2% between early August and early September 2025.

Leisure destinations lag

Leisure-led destinations are also lagging. Las Vegas is pacing -12.8% below the actual rates achieved in Q4 2024. On top of that year-over-year gap, operators cut prices again between early August and early September 2025, with advertised rates for Q4 stays falling a further −5.5%.

Among other leisure-led destinations, New Orleans shows the steepest correction. Advertised rates for Q4 2025 are 16.5% lower than Q4 2024 actuals, and prices for those same Q4 dates have dropped a further 1.4% between early August and early September 2025.

Maui is also trending below last year, with advertised rates pacing −3.6% under Q4 2024, and month-to-month data shows a further −4.6% reduction for Q4 stays. Yet even with these declines, Maui’s prices remain among the highest in North America,

Canada: East–West divide

In Canada, the East–West divide is clear in the forward-looking data. Vancouver is pacing -13.4% below Q4 2024, consistent with its weaker full-year performance. Toronto is pacing -1.8% lower, though advertised rates have inched upward in the past month. 

By contrast, Montreal (+0.5%) and Ottawa (+1.5%) are pacing slightly ahead of last year, while Halifax stands out with a strong +16.4% gain for Q4 2025 compared with the same period in 2024 – the largest increase among major Canadian cities.

Oceania

Oceania’s hotel market has moved into contraction after several years of strong growth. As of August 2025, average rates over the past 12 months are -4.3% lower than in the same period a year earlier, confirming a clear year-over-year decline.

Luxury leads the downturn

By segment, the downturn is broad but uneven. Five-star hotels have fallen the most, with 12-month average rates -9.2% lower than the prior year.

Four-star properties are down -1.9%, while three-star properties are down -2.1%. The luxury premium has narrowed as a result: 5-star hotels, which were more than 60% more expensive than 4-star hotels in 2023, now hold only about a 54% premium.

Monthly data shows the steepest luxury declines occurred early in 2025. In March, 5-star rates were down -20.3% compared with March 2024, though they later stabilized and posted a modest +3.2% YoY increase in August.

Persistent mid-market pressure

The 4-star tier has seen persistent pressure, with rates consistently -6% to -12% lower through much of the year. Three-star hotels have been steadier on a year-over-year basis and are the only tier currently forecast to post a slightly positive December result (+0.1% compared with December 2024).

Recent pricing activity shows that this tier is also under the heaviest short-term pressure, with advertised Q4 rates revised downward by −2.2% between early August and early September, whereas 4-star hotels have shown small upward adjustments overall, with advertised Q4 rates rising +2.3% in the last 30 days.

Country performance

At the country level, Australia’s average rates for 2025 are pacing -4.5% below 2024, while New Zealand is down -9.5%. Most Pacific Island destinations are also weaker, including Fiji (-9.4%) and Samoa (-13.8%). The Cook Islands are the only positive outlier, with average rates +3.7% higher than in 2024.

Australian cities strengthen into year-end

Advertised rates in Australia’s major cities are trending above last year. Perth is pacing +10.7% higher for Q4 2025 compared with Q4 2024, Adelaide +13.0%, Melbourne +7.3%, and Sydney +5.8%. 

New Zealand: Queenstown bucks the trend

In New Zealand, the picture is mixed: Auckland is pacing -5.1% below the same quarter last year, Wellington -7.8%, while Queenstown is bucking the trend with Q4 rates advertised +19.0% above 2024 levels.

That growth is reinforced by strong short-term pricing momentum, with advertised rates rising +9.7% between early August and early September 2025, compared with just +2.1% in the same window a year earlier.

Conclusion

Across regions, the data shows that the global hotel market has shifted from rapid recovery into a cooler, more uneven phase. Broad-based rate surges have given way to a patchwork of outcomes shaped by segment mix, geography, and event-driven demand.

Three themes stand out:

• Widespread cooling: Most regions are reporting lower average rates in 2025 than in 2024. Even in markets that are growing, gains are smaller than the double-digit surges of prior years.

• Segment divergence: Luxury hotels have generally protected their rate levels, while 3- and 4-star properties are absorbing much of the correction. The exception is Oceania, where luxury properties have led the downturn.

• Selective resilience: Northern Africa, parts of Southern Europe, Japan, and Brazil show that strong leisure demand, local events, or favorable travel flows can still support year-over-year growth, even as regional averages decline.

Q4 outlook: cautious optimism

Looking ahead to the final quarter of 2025, advertised rates suggest cautious optimism. Many markets are pacing ahead of last year, particularly in Germany, Mediterranean leisure destinations, and select cities across Asia and the Americas.

At the same time, several major hubs – from London to Los Angeles – are pacing below 2024 levels, showing that rate momentum into year-end is uneven and highly dependent on market and segment.

What this means for hoteliers

For hoteliers, this cooler market calls for sharper, more targeted strategies.

• Segment pricing: Differentiate rate strategies by property tier, rather than relying on broad market averages.

• Local demand drivers: Track and capitalize on events, seasonality shifts, and destination-specific trends.

• Geographic focus: Adjust strategies market by market, as resilience and pressure vary widely even within the same region.

The broad playbook of the past few years – riding a tide of global demand – is no longer enough. Pricing power now comes from precision: knowing which segments can hold rates, which destinations have latent demand, and where operators must be more flexible to stay competitive.