The ongoing U.S. government shutdown is significantly impacting the hotel industry, with an estimated loss of $175 per room per week in revenue. This downturn is particularly pronounced in markets heavily reliant on international travel, such as Las Vegas, New York City, Miami, and California.
How the Shutdown Affects Hotel Demand
The U.S. Travel Association estimates that the ongoing government shutdown is costing the U.S. travel economy approximately $1 billion per week in lost spending⁵. With approximately 5.7 million hotel rooms in the U.S., from a 2024 industry report¹, this translates to a loss of about $175 per room per week.
Flight Disruptions and Their Ripple Effect
Staffing shortages among air traffic controllers and TSA agents, who are working without pay, have led to significant flight delays and cancellations. Between Monday and early Wednesday of the shutdown week, nearly 12,000 flight delays and around 200 cancellations were reported². This has caused travelers to reconsider or cancel their trips, leading to reduced hotel bookings.
Decline in International Visitors
The U.S. is projected to be the only major travel market experiencing a decline in international visitor spending this year. Inbound visits are expected to fall by 6.3%, from 72.4 million in 2024 to 67.9 million in 2025, according to the U.S. Travel Association⁴.
STR’s analysis indicates that a 1% reduction in international inbound travel would reduce hotel demand by approximately 654,000 room nights annually. Scaling this to a 6.3% decline suggests a potential loss of over 4.1 million room nights nationwide³.
Implications for Hotel Asset Managers & Underwriters
Given these dynamics, hotel asset managers and underwriters should consider the following strategies:
-
Monitor Travel Trends: Stay informed about shifts in international travel patterns, particularly from key markets like Canada, Mexico, and Europe.
-
Adjust Revenue Management Strategies: Implement flexible pricing models and promotions to attract domestic travelers and mitigate the impact of declining international demand.
-
Enhance Operational Efficiency: Optimize staffing and operational costs to maintain profitability amidst fluctuating demand.
-
Strengthen Partnerships: Collaborate with local tourism boards and international travel agencies to bolster marketing efforts and attract visitors.
-
Underwrite Revenue Expectations Conservatively: For internationally reliant hotel markets, investors and developers need to price in lower international demand in their revenue forcast.
By adopting proactive strategies and staying informed about industry trends, hotel asset managers and underwriters can navigate these challenges and sustain performance.
- Industry report. (2024, December 9). US hotel construction lending remains tight despite interest rate drops, higher room demand. Retrieved October 9, 2025, from industry publication
- Reuters. (2025, October 9). Air travelers rethink plans as US government shutdown causes flight delays, cancellations. Retrieved October 9, 2025, from https://www.reuters.com/business/world-at-work/air-travelers-rethink-plans-us-government-shutdown-causes-flight-delays-2025-10-09/
- STR. (2025, May 1). Analyzing the impact of declining international inbound travel on U.S. hotel demand. Retrieved October 9, 2025, from https://str.com/data-insights-blog/analyzing-impact-declining-international-inbound-travel-us-hotel-demand
- U.S. Travel Association. ( October 01, 2025). Travel Forecasts. Retrieved October 9, 2025, from https://www.ustravel.org/research/travel-forecasts
- U.S. Travel Association. (2025, October 8). America’s travel economy has lost $1 billion—and counting. Retrieved October 9, 2025, from https://www.ustravel.org/press/us-travel-association-americas-travel-economy-has-lost-1-billion-and-counting
