San Diego’s hotel market is one of the most dynamic in California, with notable differences between submarkets. This mid-year 2025 hotel report breaks down hotel performance metrics, including occupancy, average daily rate (ADR), revenue per available room (RevPAR), and the construction pipeline, by San Diego submarkets such as Downtown, La Jolla, Carlsbad, Chula Vista, and others.
The overall hotel market performance for San Diego County is:
| Metric | YTD | Trailing 12-Month |
| Occupancy | 71.5% | 74.0% |
| ADR | $204.31 | $214.49 |
| RevPAR | $146.12 | $158.72 |
Source: CoStar
San Diego’s single biggest convention, Comic-Con, will stay in San Diego through 2026, and lodging demand is supported by a diverse mix of industries, including biotechnology, healthcare, universities, and military operations.
San Diego attracts vacationers with its scenic coastline and popular destinations like the world-renowned zoo, marine parks, and family-friendly theme parks. The waterfront convention center hosts major meetings and exhibitions, drawing groups and corporate attendees. Business travelers frequent the Golden Triangle in La Jolla, among other districts.
San Diego appeals to developers, but it is a high-barrier-to-entry market due to increased building costs, tight environmental controls, and local opposition. However, higher hotel inventory growth has arrived as the 1,600-room Gaylord in Chula Vista just opened this month. In total, 1,400 rooms in 10 hotels are under construction, representing an unusually high inventory growth of 2.1%.
Jump to a Submarket:
- San Diego CBD Hotel Market Performance
- San Diego Northeast / Escondido Hotel Trends
- SeaWorld / Old Town / Airport Hotel Performance Data
- South/East San Diego Hotel Development and Trends
- Carlsbad / Oceanside Hotel Market Insights
- La Jolla/UTC/Sorrento Valley Hotel Market Overview
- Mission Valley Hotel Trends and Metrics
San Diego sports more submarkets than below, but this mid-year report provides a feel for the market as it enters peak season.
San Diego CBD Hotel Market Performance
San Diego’s Central Business District (CBD) has historically achieved occupancy levels around 80% from 2014 to 2019. However, over the 12 months through May, occupancy moderated to 73.7%, reflecting a -0.3% decline compared to the broader market’s 0.7% increase.
The slowdown in performance has been evident across all major demand segments, including group, leisure, and business transient travel. Despite occupancy challenges, the CBD’s 12-month average ADR reached a record $270, supported by ongoing rate growth. Leisure and convention travel serve as the key drivers of market performance here.
There are three hotels totaling 490 rooms under construction. This represents a 2.8% increase in inventory over the next two years.
Elevated borrowing costs, rising construction expenses, and California’s stringent regulatory environment make it increasingly challenging to develop full-service hotels today. While the market remains appealing to travelers, investors, and developers alike, the return on investment after today’s debt costs is unlikely to be worth the risk, as costs are rising faster than revenue growth.
This submarket will face some challenges in the short term, with the opening of the Gaylord Resort in Chula Vista and the softness in the office market, which has slowed the opening of the IQHQ office towers. This shall pass, and the proximity to everything San Diego has to offer will keep this market alive.
The capitalization rate for buyers is in the 7-7.5% range for most of the San Diego region.
San Diego CBD – Key Performance Metrics
| Metric | YTD | Trailing 12-Month |
| Occupancy | 72.2% | 73.7% |
| ADR | $264.74 | $269.19 |
| RevPAR | $204.31 | $198.31 |
| Inventory Growth | +2.8% | — |
| Rooms Under Construction | 490 | — |
U.S. performance for May was virtually flat, and that pattern might continue through 2025:
- Occupancy: 65.3% (-0.7%)
- Average daily rate (ADR): US$162.72 (+0.8%)
- Revenue per available room (RevPAR): US$106.30 (+0.1%)
Source: CoStar
San Diego Northeast / Escondido Hotel Trends
San Diego Northeast/Escondido comprises 92 hotel properties, which contain around 9,400 rooms. Among the subtypes, there are 2,200 Luxury and Upper Upscale rooms, 4,600 Upscale and Upper Midscale rooms, and 2,600 Midscale and Economy rooms in San Diego’s Northeast/Escondido area. Marriott has a significant presence in this submarket.
Approximately 120 rooms are under construction in San Diego’s Northeast/Escondido area, accounting for 1.3% of its existing inventory. No hotels have been built over the past 12 months; however, the Lakehouse Resort has undergone a substantial upgrade.
| Metric | YTD | Trailing 12-Month |
| Occupancy | 71.1% | 73.4% |
| ADR | $167.25 | $173.77 |
| RevPAR | $118.93 | $127.58 |
Source: CoStar
SeaWorld / Old Town / Airport Hotel Performance Data
SeaWorld/Old Town/Airport comprises 72 hotel properties, which contain approximately 9,500 rooms. Among the subtypes, there are 4,400 Luxury and Upper Upscale rooms, 3,600 Upscale and Upper Midscale rooms, and 1,600 Midscale and Economy rooms in Sea World, Old Town, and Airport.
Approximately 120 rooms are under construction in Sea World/Old Town/Airport, which accounts for just over 1% of its existing inventory. No hotels have opened over the past 12 months. Given that this submarket serves government, leisure, and some corporate travelers, it is likely to continue to perform at or above these levels for the next two years.
| Metric | YTD | Trailing 12-Month |
| Occupancy | 74.0% | 76.4% |
| ADR | $186.99 | $205.10 |
| RevPAR | $138.29 | $156.75 |
Source: CoStar
South/East San Diego Hotel Development and Trends
San Diego South/East comprises 110 hotel properties, which contain around 9,100 rooms. Among the subtypes, there are 2,500 Luxury and Upper Upscale rooms, 2,200 Upscale and Upper Midscale rooms, and 4,300 Midscale and Economy rooms in San Diego’s South and East areas.
Approximately 360 rooms are under construction in San Diego’s South/East area, accounting for 3.9% of its existing inventory. No new hotels have opened over the past 12 months, but a 3.9% new supply will have some impact.
While none of the current hotels in this submarket will be competing for these groups, the Gaylord Pacific is just the beginning of a massive Chula Vista Bayfront transformation that’s reshaping the entire South Bay submarket.
Here’s what’s in the pipeline for Chula Vista:
- Sweetwater Park: Opened in April 2025, this 39-acre park is now the largest in the Port’s system. It’s designed for nature-based recreation and connects to the Sweetwater Marsh and Living Coast Discovery Center.
- Harbor Park Expansion: The existing Bayside Park is being expanded to 25 acres, featuring new picnic areas, a beach, playgrounds, and a boat launch. Construction is expected to wrap up by summer 2026.
- Amara Bay: A mixed-use development in planning stages, featuring up to 1,500 condos, 420,000 square feet of commercial space, and a 250-room hotel—all designed with walkable plazas and public promenades.
- Sun Outdoors San Diego Bay: Already open, this upscale RV resort includes vacation cottages, a pool, gym, and direct access to the bayfront’s trails and parks.
Altogether, the Chula Vista Bayfront Master Plan covers 535 acres and includes:
- 70 acres of new parks
- 120 acres of open space and habitat restoration
- 2,850 hotel rooms
- 600,000 square feet of retail and dining
- A shoreline promenade and bike trail network
It’s one of the largest waterfront redevelopments in the U.S., and it’s turning South Bay into a serious destination. Stay tuned for the economic impact of this project!
| Metric | YTD | Trailing 12-Month |
| Occupancy | 70.5% | 74.6% |
| ADR | $140.96 | $150.94 |
| RevPAR | $99.42 | $112.58 |
Source: CoStar
Carlsbad / Oceanside Hotel Market Insights
Carlsbad/Oceanside comprises 84 hotel properties, which contain around 8,200 rooms. Among the subtypes, there are 2,900 Luxury and Upper Upscale rooms, 3,000 Upscale and Upper Midscale rooms, and 2,300 Midscale and Economy rooms in Carlsbad/Oceanside.
This submarket has experienced a significant increase in supply over the past few years, but this growth is now slowing down. Approximately 32 rooms are under construction in Carlsbad/Oceanside, accounting for 0.4% of its existing inventory. Over the past 12 months, approximately 86 rooms have been added across one building.
The market has attracted strong corporate business in Carlsbad, along with beaches and Legoland, providing leisure business. The larger Carlsbad hotels also experience significant group room demand. Oceanside has recently come into its own with the addition of Seabird and Mission Pacific on the waterfront.
| Metric | YTD | Trailing 12-Month |
| Occupancy | 69.2% | 71.3% |
| ADR | $194.67 | $207.15 |
| RevPAR | $134.75 | $147.76 |
Source: CoStar
La Jolla/UTC/Sorrento Valley Hotel Market Overview
San Diego/La Jolla comprises 51 hotel properties, which contain around 7,000 rooms. Among the subtypes, there are 4,300 Luxury and Upper Upscale rooms, 2,300 Upscale and Upper Midscale rooms, and 410 Midscale and Economy rooms in San Diego/La Jolla.
Approximately 130 rooms are under construction in San Diego and La Jolla, accounting for 1.8% of the existing inventory. No hotel has opened over the past 12 months.
The communities of Del Mar, La Jolla, Carmel Valley, and Sorrento Valley make for a potent mix of corporate, group, and leisure business.
| Metric | YTD | Trailing 12-Month |
| Occupancy | 72.2% | 74.7% |
| ADR | $242.50 | $261.85 |
| RevPAR | $175.18 | $195.56 |
Source: CoStar
Mission Valley Hotel Trends and Metrics
Mission Valley comprises 30 hotel properties, which contain around 6,200 rooms. Among the subtypes, there are 1,600 Luxury and Upper Upscale rooms, 2,400 Upscale and Upper Midscale rooms, and 2,100 Midscale and Economy rooms in Mission Valley.
Approximately 150 rooms are under construction in Mission Valley, accounting for 2.4% of its existing inventory. No new hotels have opened over the past 12 months; however, this market has undergone a notable transformation over the past decade. Most of the beat-up hotels built in the 1970s are now long gone.
This market serves as a discounted group room supplier, a strong leisure business market, and a driver of government and mid-market corporate demand.
| Metric | YTD | Trailing 12-Month |
| Occupancy | 70.0% | 74.2% |
| ADR | $156.16 | $166.06 |
| RevPAR | $109.29 | $123.24 |
Source: CoStar
Conclusion:
From the explosive development in Chula Vista to strong occupancy in SeaWorld and La Jolla, San Diego’s hotel market in 2025 presents a mix of opportunity and risk. With over 1,400 rooms under construction and the Gaylord Pacific changing the landscape, investors, developers, and hospitality professionals should closely monitor neighborhood-level data.
My POV: What I’d Be Watching as a Hotel Owner/Operator
1. Chula Vista will impact everyone
The Gaylord opening marks the beginning of a significant shift in the South Bay. Group demand is going to spread out. Watch compression and how it hits ADR in CBD and Mission Valley.
2. RevPAR is rising, but so are costs
Revenue looks good on paper. But costs are climbing faster. Between debt, payroll, and insurance, margins are thinner than they look, and are lower than last year. Review your insurance costs across the board, tighten your payroll costs, and monitor your guest acquisition costs.
3. CBD still has legs
It’s soft now, but conventions, leisure, and cruise travel will keep the CBD in play. It just needs time to recover from office-related drag and possible impact from the Gaylord. Mark Cuban even thinks AI will force more in-person events.
4. Northeast and inland areas have upside
Submarkets like Escondido and San Marcos are adding healthcare facilities, which will stimulate demand starting in 2027. Currently, corporate demand is weak.
5. New supply isn’t always direct competition
Gaylord and other luxury or large group hotels won’t pull your guests unless you’re in that space. But they will likely reset rate expectations upward.
6. Capital is tight
Cap rates are up, and lenders are cautious. If you’re planning a sale, refinance, or repositioning, be prepared to adjust price expectations. If the Fed lowers rates materially, this will have a positive impact on all.
7. Labor is still your most significant challenge
Rooms are selling, but finding reliable staff at the right price is more complex than ever. Rethink service models if you haven’t already. Consider tech-driven options such as kiosks, robotics, automation, and AI to reduce pressure on headcount while maintaining service quality.
Join the newsletter to get these insights delivered straight to your inbox.
