📢 Good morning,
Labor Day 2025 marked the busiest U.S. holiday travel period on record. TSA screened 10.4 million passengers over the four-day weekend, +3.3% YoY, with 17 million traveling Thursday–Wednesday (+8.5% YoY). Lower travel costs (airfare, hotels, gas) fueled demand. Hotel occupancy returned to pre-pandemic levels, and airlines lifted Q3 guidance. The summer season (Memorial Day–Labor Day) is now the busiest in U.S. air travel history.
TSA Screenings (Labor Day 2025): 10.4M Fri–Mon, +3.3% YoY; 17M Thu–Wed, +8.5% YoY
Travel Costs: –2% YoY overall; hotel rates –11% YoY; gasoline $3.50/gal vs $3.80/gal in 2024
Hotel Occupancy: mid-60% nationwide, near 2019 levels
Short-Term Rentals: 18 of top 24 markets saw higher bookings YoY
Airline Ancillary Revenue: record levels in Q3 2025
Hospitality Financing: hotel cap rates compressed ~25 bps; debt spreads tightened
1. Demand Drivers
Travel costs eased compared to prior years. Airfares, hotel rates, and fuel declined modestly, expanding accessibility. Pent-up leisure demand from pandemic years extended into 2025. Consumer spending data show prioritization of travel and experiences despite high interest rates.
2. Hospitality Operations
Hotels achieved occupancies on par with 2019 (~65%). Resort markets were near full capacity. Theme parks and national parks reported surges, boosting local retail and F&B. However, labor shortages strained operations; wage growth exceeded 5%, and service quality risks emerged.
3. Capital Markets
Investors and lenders are reengaging in hospitality. Cap rates for prime hotels compressed ~25 bps. Securitization markets showed stronger appetite for hotel collateral. REITs with leisure exposure attracted new equity. Airport revenue bonds tightened on record enplanements.
4. Risk Factors
Record volumes may normalize by 2026. Consumer savings rates are declining, and higher borrowing costs weigh on operators. Airlines face rising jet fuel and labor expenses, which may push fares higher in 2026. Hospitality underwriting should assume stabilized occupancies (~65%) and modest ADR growth (2–3% annually).
Travel Boom Sustained: Summer 2025 confirmed full recovery of U.S. leisure travel.
Hospitality Tailwinds: Hotels and tourism-linked retail benefit from record demand.
Consumer Priority: Travel spending strong despite interest rate environment.
Operational Strain: Staffing shortages and cost inflation cut into NOI margins.
Stress Test Passed: Operators managed record passenger and guest volumes with minimal disruption.
Seasonal Reset: Fall is quieter; operators are using it for maintenance and staff training.
Revenue vs. Costs: Strong top-line results offset by higher labor and utility costs. Operators will test technology and streamlined offerings to protect margins.
Holiday bookings (Thanksgiving, December) are pacing ahead of 2024. Corporate travel is slowly returning, with conference bookings up. Macro risks remain: potential fuel cost spikes, softening job growth, and elevated rates. Capital markets remain constructive; hotel transactions and REIT offerings are expected in Q4. A Fed rate cut by year-end would further compress hotel cap rates.
U.S. Air Travel Volume, Labor Day 2019–2025 — Line chart showing TSA screenings (Fri–Mon), with record 10.4M in 2025.
U.S. TSA Screenings, Holiday Week 2019–2025 — Bar chart showing weeklong totals, 17M in 2025 (+8.5% YoY).
U.S. Hotel Occupancy & ADR (Summer 2019–2025) — Dual-axis line chart, occupancy ~70% and ADR at $160 in 2025.
