Based on April 2025 data | Source: CoStar
Southern California’s hotel markets are experiencing mixed demand trends heading into summer season. San Diego continues to lead the state in occupancy, driven by steady leisure, government, and convention demand. Orange County has slowed construction due to high costs, while Los Angeles is seeing gains from ADR growth and demand tied to recent wildfires and upcoming global events like the FIFA World Cup and the Olympics.
Despite varied performance, all three markets remain resilient. Challenges such as increased competition from short-term rentals, slower international travel recovery, and tighter development conditions are shaping the landscape. Still, long-term fundamentals remain strong, supported by diverse demand drivers and a robust pipeline of high-profile events that are expected to lift performance in the coming years.
Hotel Performance Snapshot
| April Performance | San Diego | Orange County | Los Angeles |
| Occupancy | 72.5% | 70.8% | 73.3% |
| Occupancy Change YoY | -5.8% | 1.1% | 4.5% |
| ADR ($) | $203.67 | $199.21 | $197.46 |
| ADR ($) Change YOY | -0.4% | -1.7% | 2.7% |
| RevPAR ($) | $147.55 | $141.00 | $144.67 |
| RevPAR ($) Change YOY | -6.2% | -0.7% | 7.3% |
San Diego
Hotel Market Snapshot:
- Occupancy forecast: 73.9% (highest in CA)
- RevPAR YoY: ▲2.3%
- Development: 2,849 rooms (4.3% inventory growth)
Hotel Owner Insight:
According to CoStar, San Diego’s hotel market consistently leads the state in occupancy, reaching a 12-month average of 73.9% through April. Strong performance is driven by diverse demand, including leisure, government, and convention-related travel. As of April, RevPAR increased by 2.3%, though growth has slowed due to reduced government-related travel. Projections indicate flat to low RevPAR growth through 2026, with occupancy slightly declining to around 73% from 2025 to 2027 due to new hotel supply and modest demand expansion.
Lodging demand is bolstered by industries such as biotech, healthcare, academia, and military operations. The city remains a top vacation destination due to its coastline, zoo, marine parks, and theme parks. Business travel thrives in commercial districts like the Golden Triangle. While San Diego appeals to developers, high entry barriers exist due to construction costs, environmental regulations, and local resistance.
Despite these challenges, hotel inventory growth is expected to rise with major projects like the 1,600-room Gaylord in Chula Vista opening in May 2025. Nine hotels totaling 2,849 rooms are under construction, marking a high inventory increase of 4.3%. Hotel sales have remained strong, with a 12-month volume of $612 million, compared to a three-year average of $724 million.
See Also: Newly opened Chula Vista Complex includes 1,600 rooms
San Diego Hotel Occupancy Trends:
Orange County
Hotel Market Snapshot:
- Occupancy: 72.3% (vs. U.S. avg. 63%)
- RevPAR YoY: ▼ -0.4%
- Development: 520 rooms by 2026 (0.8% inventory growth)
Hotel Owner Insight:
Leisure travel demand in Orange County has softened, with a -0.4% change in RevPAR over the past year, mainly due to a -1.8% decline in market rates despite stable occupancy. Key leisure destinations like Huntington Beach and Disneyland faced competition from international travel and alternative accommodations like Short-term rentals (STRs) and cruises.
RevPAR is projected to grow 2-3% annually through 2028, driven by occupancy gains and major upcoming events in the greater LA area, including the 2026 FIFA World Cup, 2026 NBA All-Star Game, 2027 Super Bowl, and 2028 Olympics. However, economic uncertainty and a potential slowdown in domestic leisure travel pose risks.
According to CoStar, Orange County maintains strong occupancy levels at 72.3%, exceeding the national average of 63.0%. Conventions, including the National Association of Music Merchants and Natural Products Expo West, contributed to recent hotel performance. Business travel demand is improving but remains below pre-pandemic levels.
Hotel construction has slowed due to high costs and strict lending standards, with only 520 rooms expected to be added by 2026, a lower increase than the national average of 2.3%
Los Angeles
Hotel Market Snapshot:
- Occupancy: Moderate, steady
- RevPAR YoY: ▲ 5%
- Development: Slowing pipeline (1,900 rooms by 2027)
Hotel Owner Insight:
RevPAR in Los Angeles grew by 5% in the first quarter of 2025 due to strong demand, partially driven by displaced residents and recovery teams from January’s wildfires, according to CoStar. While the fires did not damage hotels or major attractions, their impact on long-term hotel demand remains uncertain.
Leisure travelers, primarily drawn by beaches, Hollywood, and theme parks, make up the dominant segment. However, national trends of slowing leisure demand and price-sensitive consumers have caused a decline in ADR. Some travelers are shifting to alternative accommodations, international travel, or cruises. Inbound international demand has not yet rebounded to pre-pandemic levels, with such visitors now representing under 20% of hotel room demand compared to nearly 25% in 2019.
Annual hotel performance is projected to grow, led by ADR increases. However, economic uncertainties and further leisure travel slowdowns pose risks. Long-term demand is expected to benefit from upcoming large events. These include the 2026 FIFA World Cup, NBA All-Star Game, 2027 Super Bowl, and 2028 Olympics.
Hotel construction has slowed, with only 1,900 new rooms projected by 2027, compared to 4,600 rooms added in the previous three years.
LA Hotel Construction Spotlight:
The largest hotel in LA to be completed in 2025 is the Hilton Arcadia Los Angeles, with 168 rooms in the Upper Upscale class. It will be located just east of the Santa Anita Racetrack.
Stay Informed with the Latest Hospitality Insights
As Southern California’s hotel markets navigate new landscapes in 2025, staying updated on industry trends and forecasts is crucial. For a deeper dive into market dynamics and strategic planning, consider exploring these resources:
- San Diego Hotel Market – 2025 mid-year report: Gain detailed insights into San Diego’s hotel performance metrics and demand drivers.
- Hotel Forecast 2025: Understand the trends impacting occupancy and average daily rates across various markets.
- Wellness Programs that Drive Guest Loyalty in 2025: Explore how implementing wellness initiatives can enhance guest satisfaction and foster brand loyalty.
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