San Diego’s hotel market continues to demonstrate resilience despite facing headwinds from new supply, cooling leisure demand, and economic uncertainty. However, performance varies dramatically across the region’s seven major submarkets, each shaped by distinct demand drivers, supply dynamics, and competitive positioning.
This comprehensive analysis examines 2025 performance metrics; Occupancy, Average Daily Rate (ADR), and Revenue per Available Room (RevPAR) across all San Diego submarkets, revealing where opportunities and challenges lie for investors, operators, and developers.
Jump to each section:
- San Diego South/East
- Carlsbad/Oceanside
- Mission Valley
- San Diego Central Business District (CBD)
- Sea World/Old Town/Airport
- San Diego Northeast/Escondido
- San Diego/La Jolla
- Rankings and Key Findings
San Diego South/East: Gaylord Impact Reshapes the Submarket
Market Overview
San Diego South/East comprises 120 hotel properties containing approximately 9,300 rooms. The submarket’s inventory breaks down as follows:
- Luxury & Upper Upscale: 2,500 rooms
- Upscale & Upper Midscale: 2,400 rooms
- Midscale & Economy: 4,400 rooms
2025 Performance Metrics
As of December 2025, San Diego South/East posted the following 12-month performance:
| Metric | South/East | Market Average |
| Occupancy | 70.0% | 72.3% |
| ADR | $157 | $213 |
| RevPAR | $110 | $154 |
Year-Over-Year Changes
The submarket experienced the sharpest performance decline across San Diego:
- Occupancy: -8.5%
- ADR: +3.6%
- RevPAR: -5.2%
Supply Impact
The dramatic occupancy decline stems primarily from the May 2025 opening of the 1,600-room Gaylord Pacific Resort in Chula Vista—the largest hotel delivery in San Diego’s recent history. This single property increased the submarket’s room count by approximately 17% overnight, even though the hotel opened in phases.
An additional 160 rooms remain under construction, representing 1.7% of existing inventory.
Market Implications
Despite the supply shock, ADR growth of 3.6% suggests the Gaylord is attracting new demand to the submarket rather than purely cannibalizing existing properties. However, the -8.5% occupancy decline indicates absorption will take time, and competitive pressure on non-group-oriented properties remains elevated.
Carlsbad/Oceanside: Stability in North County
Market Overview
Carlsbad/Oceanside features 84 hotel properties with approximately 8,200 rooms:
- Luxury & Upper Upscale: 2,900 rooms
- Upscale & Upper Midscale: 3,000 rooms
- Midscale & Economy: 2,300 rooms
2025 Performance Metrics
As of December 2025, Carlsbad/Oceanside delivered relatively stable performance:
| Metric | Carlsbad/Oceanside | Market Average |
| Occupancy | 70.2% | 72.3% |
| ADR | $210 | $213 |
| RevPAR | $146 | $154 |
Year-Over-Year Changes
The submarket showed modest declines:
- Occupancy: -0.7%
- ADR: +1.5%
- RevPAR: +0.7%
Supply Pipeline
Only 18 rooms are under construction, representing just 0.2% of existing inventory, the lowest development activity across all submarkets. No hotel assets delivered over the past 12 months.
Market Positioning
Carlsbad/Oceanside benefits from coastal leisure demand, proximity to LEGOLAND California, and corporate activity from life sciences and technology companies. The minimal supply growth and positive RevPAR growth position this submarket favorably for 2026.
Mission Valley: Supply Pressure Without Deliveries
Market Overview
Mission Valley comprises 30 hotel properties with approximately 6,100 rooms:
- Luxury & Upper Upscale: 1,600 rooms
- Upscale & Upper Midscale: 2,400 rooms
- Midscale & Economy: 2,100 rooms
2025 Performance Metrics
As of December 2025, Mission Valley posted:
| Metric | Mission Valley | Market Average |
| Occupancy | 71.5% | 72.3% |
| ADR | $159 | $213 |
| RevPAR | $113 | $154 |
Year-Over-Year Changes
Mission Valley experienced the second-sharpest performance decline:
- Occupancy: -7.0%
- ADR: -4.3%
- RevPAR: -11.0%
Supply and Demand Dynamics
Despite no deliveries over the past 12 months, 150 rooms remain under construction, representing 2.5% of the existing inventory. The -11.0% RevPAR decline suggests demand softness rather than supply-driven compression, likely reflecting reduced corporate travel and group activity in this traditionally business-oriented corridor.
San Diego CBD: Premium Rates, Modest Headwinds
Market Overview
The San Diego Central Business District has historically ranked among the metro’s top-performing lodging submarkets, with occupancy averaging near 80% from 2014 through 2019.
2025 Performance Metrics
As of December 2025, the CBD maintained its position as the market’s rate leader:
| Metric | San Diego CBD | Market Average |
| Occupancy | 72.6% | 72.3% |
| ADR | $268 | $213 |
| RevPAR | $195 | $154 |
Year-Over-Year Changes
Performance softened more recently:
- Occupancy: -1.4%
- ADR: -0.2%
- RevPAR: -1.6%
Demand Drivers
The San Diego Convention Center remains the primary driver, hosting major events including:
- Comic-Con: Draws over 100,000 attendees annually
- Corporate, association, and medical meetings
- Steady calendar of group events
Additional demand comes from:
- Gaslamp Quarter entertainment district
- Petco Park sporting events
- USS Midway Museum
- Cruise terminal activity
- Waterfront redevelopment
- Military installations
- Federal and state courthouses
- Legal and professional services sector
- Balboa Park and San Diego Zoo
- The Rady Shell cultural venue
Supply Pipeline
Hotel construction had been limited, with just two openings from 2019 to 2025. However, activity is increasing:
- Under Construction: 3 projects totaling 490 rooms
- Supply Increase: 2.8% in 2026
Development faces hurdles, including high interest rates, construction costs, and regulatory constraints, yet the CBD remains a magnet for both capital and travelers.
Investment Activity
Transaction activity increased over the past 12 months, with approximately $138 million in volume across 2 trades. However, only four deals closed between 2023 and 2024, well below the historical pace. While this recent increase represents progress, volumes remain in line with the three-year average of $185 million.
2026 Outlook
RevPAR growth is expected to remain modest in 2026 before strengthening longer term, supported by the CBD’s deep and diverse demand base.
Sea World/Old Town/Airport: Leisure-Driven Softness
Market Overview
Sea World/Old Town/Airport comprises 72 hotel properties containing around 9,600 rooms:
- Luxury & Upper Upscale: 4,400 rooms
- Upscale & Upper Midscale: 3,600 rooms
- Midscale & Economy: 1,600 rooms
2025 Performance Metrics
As of December 2025:
| Metric | Sea World/Old Town/Airport | Market Average |
| Occupancy | 74.8% | 72.3% |
| ADR | $198 | $213 |
| RevPAR | $148 | $154 |
Year-Over-Year Changes
The submarket posted declines across all metrics:
- Occupancy: -1.3%
- ADR: -3.8%
- RevPAR: -5.0%
Supply Pipeline
Approximately 250 rooms are under construction, accounting for 2.6% of the existing inventory. No hotel assets delivered over the past 12 months.
Market Dynamics
Despite leading the market in occupancy at 74.8%, the submarket’s -3.8% ADR decline reflects pricing pressure from cooling leisure demand and increased competition from short-term rentals.
San Diego Northeast/Escondido: Positive RevPAR Growth
Market Overview
San Diego Northeast/Escondido comprises 91 hotel properties containing around 9,300 rooms:
- Luxury & Upper Upscale: 2,200 rooms
- Upscale & Upper Midscale: 4,600 rooms
- Midscale & Economy: 2,600 rooms
2025 Performance Metrics
As of December 2025:
| Metric | Northeast/Escondido | Market Average |
| Occupancy | 72.1% | 72.3% |
| ADR | $174 | $213 |
| RevPAR | $125 | $154 |
Year-Over-Year Changes
The submarket posted positive RevPAR growth:
- Occupancy: -1.5%
- ADR: +3.6%
- RevPAR: +2.1%
Supply Pipeline
Nothing is under construction in San Diego Northeast/Escondido. Over the past 12 months, roughly 10 rooms opened across 1 building.
Market Positioning
The +2.1% RevPAR growth, driven by strong ADR gains, positions this submarket favorably despite minimal new supply.
San Diego/La Jolla: Institutional Demand Meets Coastal Premium
Market Overview
San Diego/La Jolla features 52 hotel properties with approximately 6,900 rooms:
- Luxury & Upper Upscale: Dominant segment
- Upscale & Upper Midscale: Secondary presence
- Midscale & Economy: Limited inventory
2025 Performance Metrics
As of December 2025, La Jolla maintained premium positioning:
| Metric | San Diego/La Jolla | Market Average |
| Occupancy | 73.8% | 72.3% |
| ADR | $260 | $213 |
| RevPAR | $192 | $154 |
Year-Over-Year Changes
Performance softened over recent months:
- Occupancy: -0.4%
- ADR: -0.5%
- RevPAR: -0.9%
Demand Drivers
La Jolla’s demand base skews heavily toward:
- Corporate: Regional headquarters
- Medical: Scripps Health facilities
- Academic: UC San Diego
- Research: Salk Institute
- Life Sciences: Torrey Pines Mesa firms
- Upscale Leisure: Coastal attractions, Torrey Pines Golf Course
Market Dynamics
Tighter corporate travel budgets and fewer in-person meetings in 2025 reduced group volumes, particularly in the upper-upscale and luxury segments. Leisure demand tied to coastal attractions remained comparatively stable but was not sufficient to fully offset weekday softness.
Supply Pipeline
Currently, 1 hotel totaling approximately 130 rooms is under construction, representing a 1.8% increase in inventory by 2026. New development in La Jolla continues to face high land costs, strict zoning, and strong community opposition, constraining large-scale expansion and preserving long-term barriers to entry.
Investment Activity
Investment activity was elevated over the past 12 months, with 2 hotel transactions totaling approximately $121 million, exceeding the three-year average of $197 million. Volume was heavily skewed by a single large sale in June, underscoring that liquidity in the submarket remains sporadic and concentrated in high-quality assets.
Outlook
RevPAR deceleration is expected to stabilize in 2026, with performance flattening as group demand finds a floor and new supply is absorbed. Growth is projected to reaccelerate in 2027, led by improved weekday demand, a gradual recovery in group activity, and La Jolla’s continued appeal to high-rated leisure travelers.
Submarket Performance Rankings
Occupancy Leaders (12-Month)
- Sea World/Old Town/Airport: 74.8%
- San Diego/La Jolla: 73.8%
- San Diego CBD: 72.6%
- San Diego Northeast/Escondido: 72.1%
- Mission Valley: 71.5%
- Carlsbad/Oceanside: 70.2%
- San Diego South/East: 70.0%
ADR Leaders (12-Month)
- San Diego CBD: $268
- San Diego/La Jolla: $260
- Carlsbad/Oceanside: $210
- Sea World/Old Town/Airport: $198
- San Diego Northeast/Escondido: $174
- Mission Valley: $159
- San Diego South/East: $157
RevPAR Leaders (12-Month)
- San Diego CBD: $195
- San Diego/La Jolla: $192
- Sea World/Old Town/Airport: $148
- Carlsbad/Oceanside: $146
- San Diego Northeast/Escondido: $125
- Mission Valley: $113
- San Diego South/East: $110
Key Takeaways for Investors and Operators
Supply Growth Concentration
New supply is concentrated in specific submarkets:
- San Diego CBD: 2.8% increase (490 rooms)
- Sea World/Old Town/Airport: 2.6% increase (250 rooms)
- Mission Valley: 2.5% increase (150 rooms)
- San Diego/La Jolla: 1.8% increase (130 rooms)
- San Diego South/East: 1.7% increase (160 rooms)
- Carlsbad/Oceanside: 0.2% increase (18 rooms)
- San Diego Northeast/Escondido: 0% (no construction)
Performance Divergence
Submarkets with minimal supply growth (Carlsbad/Oceanside, Northeast/Escondido) posted positive or stable RevPAR growth, while those absorbing significant new inventory (South/East, Mission Valley) experienced sharp declines.
Premium Positioning Holds
The CBD and La Jolla maintained their premium ADR positioning despite modest RevPAR declines, suggesting pricing power remains intact in high-barrier, high-quality submarkets.
Investment Opportunities
Transaction activity remains selective, with buyers focusing on irreplaceable locations (La Jolla coastal assets) and institutional-grade properties in the CBD. Pricing reflects more conservative underwriting amid higher interest rates and slower RevPAR growth.
2026 Outlook by Submarket
Growth Leaders
- San Diego Northeast/Escondido: Positive RevPAR momentum, zero new supply
- Carlsbad/Oceanside: Stable performance, minimal competition from new inventory
Absorption Challenges
- San Diego South/East: Continued Gaylord absorption
- Mission Valley: Demand recovery needed to offset supply additions
Premium Stability
- San Diego CBD: Modest growth supported by convention calendar
- San Diego/La Jolla: Stabilization expected as group demand finds a floor
Competitive Pressure
- Sea World/Old Town/Airport: Leisure demand recovery critical to offset supply growth
San Diego’s hotel market remains fundamentally strong, but 2025 performance underscores the importance of submarket-level analysis. Investors and operators must evaluate supply pipelines, demand drivers, and competitive positioning to identify opportunities and navigate headwinds in 2026 and beyond.
