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Research Update: Market Shifts Create Opportunities in Puerto Rico's Tourism Sector

Tuesday, July 29, 2025 Research

June Lodging Demand Remains Steady

June lodging demand, as tracked by STR (Smith Travel Research) and AirDNA, remained flatcompared to last year. Notably, there was a market shift, where hotel demand decreased by 3%,while rental demand increased by the same amount, capturing 48% of the total demand share forthis month.

Overall hotel occupancy reached 74.6%, a 4% decline from 2024. Although rental demand showsgrowth, rental occupancy rates averaged 58% for the month, an 8% decrease, in part due to a 12%increase in rental listing nights available compared to June 2024.

June hotel average rates were $252, a 7% decrease compared to last year, marking the secondconsecutive month of average rate decreases from the previous year, as demand shifts toward laterin the summer or toward the rental market.

The average rate for rental listings nights was $226, a 5% increase from the previous year, for 20,300entire place listings booked.

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Concerts and Groups to Boost Hotel Occupancy Late 2025

As we reach the midpoint of 2025, Puerto Rico’s tourism sector is on track for another record-breaking year. Lodging demand has climbed to nearly 4.2 million room nights, a 7% increase over last year, driven largely by growth in the rental market, while hotel demand has remained relatively steady.

Year-to-date average daily rates are also up, with hotels averaging $324 and rentals $226, pushing total lodging revenue to $1.16 billion, an 8% increase year-to-date. Hotels have generated 61% of that revenue ($705 million), while rentals contributed $452 million.

Lodging tax revenue is expected to slightly exceed last year’s totals (by 1–2%), despite a recent dip in hotel rates and a shift in demand toward rentals, which are taxed at a lower rate.

Looking ahead, hotel revenue performance from May to July is projected to be slightly below last year’s levels. However, the outlook for the second half of 2025 is strong, with double-digit growth in hotel occupancy expected in August and September, fueled by Bad Bunny’s concert residency and a robust group and convention business in the final quarter.

Young Travelers and Families Drive Travel Recovery

According to the July 2025 edition of The State of the American Traveler by Future Partners, a notable shift in traveler sentiment is revealed, marked by financial stability and an increased willingness to spend on travel (37%), similar to levels seen at the end of 2024. Despite lingering concerns about a potential recession, travel spending sentiment reached its highest point in over two years. Average annual travel budgets are also climbing back to record-setting levels, signaling a strong rebound in consumer confidence.

More Americans are planning trips despite economic uncertainties. The percentage of travelers who believe now is a good time to spend on travel has significantly increased compared to past months. This resurgence is especially pronounced among younger generations and families.

Expectations of a recession have leveled off; however, we will continue to monitor the situation over the next few months as the peak summer travel season comes to an end. Tariffs are expected to begin significantly affecting retail prices starting August 1, 2025, particularly for goods such as pharmaceuticals and semiconductors. Some categories, such as food and general consumer goods, are already showing early signs of price increases, with economists noting that tariffs are beginning to "bite" into core goods prices, which may erode travel budgets for future trips.

Leisure & Hospitality Among Fastest-Growing Job Sectors in Puerto Rico

According to the latest estimates from the Bureau of Labor Statistics (BLS), Puerto Rico reported 100,500 leisure and hospitality jobs as of June 2025, an increase of 25% from 2019 and 4% more than the same time last year. The BLS revised the 2024 metrics at the beginning of this year.

Employment in both accommodations and food services—including drinking establishments—continues to show growth. Overall, the Island is outperforming the national average of just 1.6% in leisure and hospitality employment growth.

Puerto Rico’s total non-farm employment currently stands at approximately 950,000 workers, reflecting a 1% increase compared to last year. Among all sectors, Leisure and Hospitality ranks fourth in terms of total jobs, following Government, Professional & Business Services, and Retail Trade.

However, when it comes to employment growth, Leisure and Hospitality is the second-fastest growing sector, trailing only Construction, which employs around 39,000 people.

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