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Research Update: 2025 Kicks Off with Record Lodging Growth

Thursday, February 27, 2025 Research

2025 Starts with Record Lodging Demand and Revenue Growth

The 2025 local tourism season has started strong. According to estimates tracked by STR (Smith Travel Research) and AirDNA, January lodging demand increased 20% from the same month last year. Overall hotel occupancy reached 72.7%, a 0.5% decline from 2024. However, booked hotel room nights showed a small increase of 1%, while hotel supply nights available increased by 2% from January 2024.

In contrast to the hotel segment, January saw a 20% increase in rental nights booked compared to the previous year. Over 329,000 room nights were booked across the Island marking a record 48% share of total lodging demand for this month.

Hotel average rates in January increased 14% this year to an average of $366, while the average rate for rental listings nights increased 4%.

Strong rental demand and higher average rates pushed lodging revenues to record levels. According to the latest estimates, total lodging revenues reached $207 million, an increase of 19% from last year.

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2025 start leaps forward to new records graphic

Busy, Busy Airport

San Juan’s Luis Muñoz Marin International Airport reported record arrivals, with 598,000 in January, a 9% year-over-year increase.

January passenger origins diversified somewhat this year. The share of arrivals from North America decreased by 2.3 points compared to last year, while the share from other regions increased by 1.6 points. Caribbean arrivals reported the highest growth in arrival share, reaching 9.5% of total arrivals.

According to Airline Data Inc., airlift to SJU for Q1 is currently 14% higher than last year, with 2.1 million seats, while Aguadilla (BQN) capacity has decreased -13%, and Ponce (PSE) has -60% less capacity. New service from Miami to Aguadilla will be available later this year.

According to the most current ForwardKeys passenger arrival forecast for San Juan, the first quarter of the year could reach up to 14% growth compared to last year.

Mixed Feelings Among American Travelers

As stated by the February 2025 State of the American Traveler from Future Partners, optimism about traveler's personal financial outlook remains strong (51.5% expect to be better off financially in the next year), and expectations of an impending economic recession remain at post-pandemic lows (35.6%),

After a strong Holiday season, the share of American travelers who said travel would be a high-budget priority in the next three months saw a -3.9 point dip from last month (to 54.3% from 58.2%). Additionally, after steadily trending upward the last year, the average expected annual leisure travel budget dropped over 15 percent, from $5,898 to $4,973, since last month. Americans cite personal finances and the overall costs of travel as reasons for deterring them from traveling, which are at 12-month highs.

Looking at when American travelers tentatively plan to travel, about one in four are planning for March and April this year, with a slight jump in June. However, nearly a third of Americans plan to travel towards the end of the year.

American travelers still spending graphic

Healthy Booking Pace

As of February, the travel booking pace for the next three months shows mixed results. Hotel reservations for January and February are pacing ahead of last year, while hotel reservations for March are lagging. Current March hotel occupancy is 52.1%, about -10% below the same time last year (as of February 9). However, part of the decrease in reserved hotel room nights is affected by a smaller group room base compared to last year and Holy Week taking place in April. April's hotel occupancy pacing is currently 4% ahead of last year at this time.

As of February 17, the latest forecast rental listing nights booked is very healthy for the next three months. The remaining February dates and March both have 16% to 17% more listing nights booked than at the same time last year, while April nights booked are currently 42% higher than last year.

The west region of the Island is the only region currently showing negative pacing for booked listing nights. February is down 2%, and March is 5% below; however, April sees some recovery, with 44.5% more nights booked compared to last year.

booking pace lookshealthy