For the most up-to-date San Diego data, check out my 2026 forecast using data throughout 2025.
We have been studying the San Diego Hotel Market for 35 years. It is one of the top performing markets in the US and below are some highlights from CoStar data through February 2025:
Key Metrics for 2025 San Diego Hotel Data
Market Performance Highlights
- San Diego achieved the highest 12-month average occupancy in California (74.5%) through February.
- Strong performance is driven by diverse demand generators from leisure, group, and corporate travel segments.
12-Month Average RevPAR
- RevPAR changed by +3.5%, indicating strong year-over-year performance despite slower growth compared to 2023.
Forecast
- Moderate annual RevPAR growth through 2026.
- Occupancy stabilizing around 74% (2025–2027) despite notable supply additions.
Demand Drivers
- Leisure: Attractions like beaches, San Diego Zoo, SeaWorld, and Legoland.
- Group: Conferences at the San Diego Convention Center, including Comic-Con (135,000 attendees annually).
- Corporate: Business hubs like Golden Triangle & sectors like life sciences, healthcare, university, and military.
Challenges & Risks
- Leisure travel slowdown following the national trend.
- Occupancy: -1.8% ADR: -1.6% (12-month change).
- Group travel: Decline in occupancy, offset by higher ADR boosting group RevPAR.
- Supply concerns: 1,600-room Gaylord in Chula Vista opening May 2025, and 4.3% inventory growth.
- Potential risks related to high building costs, environmental controls, and local opposition.
Hotel Sales
- Last 12 months sales volume: $612M (compared to $726M three-year average).
Highlight: Hilton La Jolla Torrey Pines sold for $165M in July 2024.
Key Indicators by Hotel Class
Historical vs. Forecast Averages
*Data sourced from CoStar
Market Performance
Leisure Travel: The Cornerstone of San Diego’s Hotel Demand
Performance Overview
- Primary Source: Leisure travel remains the dominant demand driver but has seen a slight decline.
- RevPAR Growth: +3.5% in the past 12 months (through February), outperforming the national average of +2.1%.
Weekend Dynamics
- Weekend Occupancy: Approximately 30% demand share, outpacing weekdays.
- RevPAR Trend: Growth is flat, reflecting a shift in the leisure travel segment.
Submarket Highlights
- Sea World/Old Town/Airport Submarket:
- RevPAR Growth: Over 4% in 2024.
- Key Driver: Occupancy expansion due to limited new supply.
- San Diego South/East Submarket:
- RevPAR Growth: Over 4% in 2024.
- Key Driver: Positive rate growth.
Leisure Travel Trends in San Diego
- Travelers are becoming more cost-conscious, scaling back expenses or opting for alternatives like:
- Vacation rentals.
- International destinations.
- Cruise vacations.
- San Diego Resilience: Unlike other markets, San Diego’s mild climate minimizes extreme seasonal fluctuations, softening the leisure travel decline.
Weekday Demand: A Counterbalance
- The dip in leisure travel is mitigated by the gradual rebound in business travel.
- The region’s life sciences sector supports this rebound, as many roles in this industry require on-site presence, making remote/hybrid work less feasible.
Meetings & Conventions: A Vital Segment for San Diego
- Group Occupancy: Approximately 30% of total hotel stays driven by large-scale events and conventions.
- 2024 Decline: Group travel dropped, particularly impacting the San Diego CBD Submarket, which relies heavily on:
- San Diego Convention Center: 2.6M square feet of waterfront space.
- San Diego CBD Submarket:
- Maintains the highest 12-month ADR and RevPAR in the market.
- Contains 2–3 times the room supply of other areas but sustains high occupancy rates.
Hotel Construction and Development Activity
San Diego Hotel Construction Pipeline: A Market on the Rise
Key Highlights
- National Comparison: Hotel construction is slowing in most markets, but San Diego stands out with 9 hotels and 2,849 rooms under construction, expanding inventory by 4.3%. Nationally, rooms under construction represent only 2.4% of total inventory.
- Historical Context: San Diego previously had one of the smallest hotel pipelines in California, but the groundbreaking of major projects has dramatically shifted its development trajectory.
Major Projects Under Construction
- Gaylord Pacific Resort Hotel & Convention Center (Chula Vista)
- Rooms: 1,600 (Largest project in the U.S.)
- Timeline: Construction began in July 2022; completion expected in May 2025.
- Significance: Marks the largest single-year increase in San Diego hotel room supply in over two decades.
- Jamul Hotel Casino (San Diego South/East Submarket)
- Rooms: 200 (16-story building)
- Timeline: Construction started in early 2024, with opening anticipated in Spring 2025.
- Amenities:
- Pedestrian sky bridge
- Restaurant and retail space
- Meeting and banquet facilities
- Spa with an outdoor deck
- Fitness center
- Rooftop pool and bar
Recent Hotel Openings & Anticipated Growth
Future Hotel Developments in San Diego
Fairmont Manchester San Diego
- Size: 1,168 rooms (Luxury-class) – Will be the largest Fairmont in the U.S. upon completion.
- Location: Waterfront between Pacific Highway & North Harbor Drive.
- Cost: $550 million ($471,000 per key).
- Additional Features:
- Adjacent to the San Diego Research and Development District, a $1.6 billion life sciences hub.
- Planned 1.5-acre public park.
- Development spans 10 acres acquired by IQHQ in 2021.
Challenges
- High Costs: Construction in San Diego faces steep building costs and strict environmental regulations.
- Recent Trends: Many new properties are replacing demolished hotels or retail spaces.
- Supply Dynamics: The 12-month supply increase is limited to 0.6% due to hotel demolitions or conversions.
The San Diego hotel market will continue to change, with strong strategies needed to improve individual hotel market share. Other information on San Diego includes a push for a $25 minimum wage, a convention center expansion, paid for by an increase in the transient occupancy tax rate and a hot start for the San Diego Padres!
Sneak peak for March 2025 Data:
Based on the RevPAR analysis of San Diego’s submarkets over the past 12 months through March, here are the top three performing submarkets:
- San Diego Northeast/Escondido Area: This submarket experienced the highest RevPAR growth, exceeding 6%. The growth was primarily driven by significant rate increases.
- San Diego/La Jolla Area: Recorded the second highest RevPAR growth, around 5%. Positive performance in this submarket was mainly due to rate growth.
- Sea World/Old Town/Airport Area: Achieved the third highest RevPAR growth, also around 5%. Occupancy expansion, supported by limited new supply, was the primary driver of performance in this submarket.
These submarkets showcase strong performance trends driven by both rate increases and occupancy dynamics, contributing to overall robust RevPAR growth in San Diego.
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Robert Rauch, CHA, has been an owner-operator of hotels for several decades and is founding chairman of Brick Hospitality and owner of R. A. Rauch & Associates, Inc. If you’re in need of hotel management or consulting services, Bob Rauch and his team are ready to help.
