Tariffs and Immigration Fears Drive Decline in U.S. Hotel Bookings, 2025

Tariffs and immigration fears are weighing on U.S. hotel bookings in 2025, pushing down international arrivals, occupancy, and room revenue in major gateway cities and border regions. Industry data show a broad pullback: hotel occupancy fell by 2.3 percentage points in March 2025 compared with a year earlier, while revenue per available room (RevPAR) dropped by more than 4%. Tourism forecasters now expect RevPAR to slip 0.1% for the full year, with national occupancy easing to 62.5%, as inbound travel weakens and price‑sensitive visitors stay away.

Downturn in international demand and economic impact

International demand—often the highest‑spending segment—has cooled quickly. International visits to the United States 🇺🇸 fell 11.6% in March year‑over‑year, with Tourism Economics projecting an 8.7% decline for 2025.

This downturn carries a heavy price:

• The group estimates $8.5 billion less in international visitor spending this year.
• The World Travel & Tourism Council estimates a potential loss of $12.5 billion.

Hotels that depend on overseas guests—New York City, Miami, and Los Angeles—report softer pipelines, muted group interest, and more short‑notice cancellations of meetings.

Regional source‑market declines

A chill is evident across North American source markets.

• Canada 🇨🇦, the largest feeder market, is expected to reduce outbound trips to the U.S. by more than 20%, potentially removing $9 billion in tourism revenue in 2025.
• Mexican travelers show similar patterns, especially near land borders, with sharper drops in weekend leisure stays and cross‑border shopping trips.

Border regions most affected include: Detroit–Windsor, San Diego–Tijuana, and the Rio Grande Valley, where operators describe thinner pickup and lower visibility into summer and fall.

Changing booking behavior

Booking behavior is shifting toward shorter lead times and greater flexibility, which complicates operations.

• About 40% of transient business bookings are now made within four days of arrival, a sharp rise in last‑minute reservations.
• Major brands (Marriott, Hilton, Hyatt) and short‑term rental platforms have trimmed 2025 revenue targets due to:
  • Weaker international search interest
  • Softer group leads
  • Rising trip costs

These trends create challenges for staffing, pricing, and food‑and‑beverage planning.

What’s driving the pullback

Industry analysts point to a combined hit from higher costs and policy uncertainty.

• New tariffs, including measures enacted in May 2025, are raising prices on imported construction materials, electronics, and furnishings—items central to hotel renovations and daily operations.
  • Result: capital projects delayed, replacement costs higher, and many properties nudging rates upward to protect margins.
• Immigration fears are dampening demand from leisure and business travelers.
  • Headlines about stricter enforcement, high‑profile operations, and tougher entry screening are affecting traveler sentiment.
  • Several countries—Canada, Germany, Japan, the United Kingdom, China, the Philippines, and Hong Kong—have issued advisories mentioning safety, immigration checks, and civil liberties.
  • The return and expansion of travel bans under President Trump (covering 12 countries with partial limits on seven more) have reduced inbound flows by constraining visas and discouraging long‑haul planning.

The policy backdrop is fluid and affects financing and investment decisions:

• Hotel owners report longer approval cycles from lenders and more conservative underwriting when a property relies heavily on international travelers.
• Although cap rates have not shifted dramatically, investors press operators on exposure to overseas mix, event calendars, and airline capacity into gateway airports.

Markets under the most pressure

The pain is concentrated in U.S. gateways and resort markets with historically high shares of foreign guests:

• New York City: thinner European and Asian business.
• Miami: cooled Latin American pipeline.
• Los Angeles: headwinds from weaker group demand and airline schedule uncertainty.

Border‑state hotels report the sharpest drops, reflecting both tariff cost pass‑through and cross‑border travel frictions.

Corporate and event travel is softer:

• Global travel buyers are shifting conferences to Canada or Europe to ease visa risks and keep costs predictable.
• Convention organizers cite travel bans and tougher screenings that complicate speaker lineups and sponsor activations, prompting venue shifts abroad.

Operational responses and group behavior

For travelers and hotel teams, the result is a more fragile booking curve:

• Shorter booking windows force hotels to price rooms closer to stay dates, rely more on promotions, and hold staffing buffers.
• Groups insert broader attrition clauses and shorter cutoff dates.
• In many cities, international feeder demand now comes in bursts tied to fare sales or major events, then drops back.

The industry expects continued softness through late 2025, with hopes that major events like the 2026 World Cup may lift select markets.

Possible longer‑term effects and industry actions

Some analysts see long‑run upsides if tariffs push more domestic manufacturing and stabilize supply chains—potentially reducing renovation volatility. However, those benefits are not expected to offset the immediate hit to U.S. hotel bookings and market‑level RevPAR.

Industry and destination groups are advocating for clearer policy signals and smoother visitor processing:

• Airports are coordinating with federal agencies to smooth arrivals and reduce bottlenecks at peak hours.
• According to analysis by VisaVerge.com, a coordinated push—messaging on entry rules, targeted marketing in key source countries, and fare stimulus by airlines—could stabilize inbound flows faster than rate cuts alone.

For readers weighing a trip: check official guidance and entry rules before booking. The U.S. Department of Commerce’s National Travel and Tourism Office provides authoritative visitation trends and updates on inbound markets to help travelers and planners time trips and events more effectively. See the NTTO’s NTTO international visitation resources at the Department of Commerce: National Travel and Tourism Office.

Practical steps hotel operators are taking

Operators are revisiting basics to protect share during this demand dip:

• Target nearer‑term source markets with lighter visa frictions.
• Offer refundable rates and clear change policies to match shorter booking windows.
• Pace renovations to avoid pushing rates above price‑sensitive thresholds.
• Strengthen airline and convention partnerships to secure base business.

Broader travel‑economy considerations

The travel economy will watch airline capacity and pricing closely:

• If tariffs keep raising input costs, hotels may face higher expenses for electronics, linens, and amenities.
• Travelers may face pricier airfares and car rentals.
• The cumulative cost stack can deter long‑haul trips from Europe and Asia and push more Americans toward domestic road trips—helpful for some secondary markets but not a fix for gateway shortfalls.

Key takeaways

• International arrivals are down, spending is down, and RevPAR is edging lower in markets most reliant on foreign guests.
• Tariffs and immigration fears are combining to depress both top‑line demand and operational flexibility for U.S. hotels.
• Industry leaders will be watching for steadier policy signals, improved visa processing, and calmer headlines to help stabilize demand as 2025 progresses.