LendingCon ’25
16
www.asianhospitality.com
September 2025 | Issue 24
effect, for example, in the first quarter
of this year, imports surged almost 50
percent as businesses imported their
goods ahead of the tariffs. Well, that meant
they could sit back and not import when
tariffs come into effect, at least for a little
while,” he said. “We've also seen suppliers
and importers absorb some of the tariff
costs, at least initially. Suppliers overseas,
they don't want to lose their customers, so
they're maybe being a little generous with
their pricing to offset some of it.”
These temporary measures can only
last for so long, Cronk said.
“We think that inflationary effects of
tariffs are just getting started and will
continue to be seen in greater effect over
the next three to four months,” he said.
“So yes, they are raising revenue, but
there's a lot of downsides to tariffs and
just a few examples, high prices.”
Another symptom of the economic
uncertainty, Cronk said, has been a
drop in consumer confidence. While
confidence went up for middle and upper
income households, he said, but for the
lowest third of household incomes in
the country, their consumer confidence
declined last month.
“[Lower income] households are the
ones that are most exposed to higher
prices and inflation. They're the ones
most worried about the labor market
and losing their jobs and the outlook
for the economy, and they remain quite
uncertain right now about the future, and
that is having an impact, in particular
on spending,” Cronk said. “The first six
months of this year, consumer spending
is basically flat. If you go back over
20 years, when did we see consumer
spending flat or down? The last two
recessions, so not a good correlation.
However, I will tell you we are not
forecasting a recession, but clearly the
economy has slowed as consumers have
lost confidence, as the labor market has
stalled out a little bit, and it's showing up
in consumer spending.”
Uncertainty leads
CoStar to trim back
expectations
Previously, CoStar and Tourism
Economics lowered U.S. hotel growth
projections for 2025 and 2026 in a release
issued at the 17th Annual Hotel Data
Conference in Nashville. They lowered
2025 growth projections—demand by
0.6 points, ADR by 0.5 and RevPAR
by 1.1—citing underperformance and
macroeconomic conditions. Similar
revisions were made for 2026, with
demand down 0.5 points, ADR 0.3 and
RevPAR 0.7.
Speaking at LendingCon, Chantal
Wu, CoStar’s senior director and
hospitality market analyst, explained
the reason for the downgraded
forecast.
“There's uncertainty, there is
tariffs, there is uncertainty on tariffs.
So, that's driving all of the forecast
change here,” Wu said. “This is
causing lower consumer sentiment,
causing reduced business travel
activities also reduced bookings.”
Wu went on to discuss market
activity in various cities. One factor
in all those markets impacting hotel
development is construction costs, she
said, which vary across the country, across
chain scales and across types of projects.
Economic cycles also have an impact.
“Especially right now, when we
have tariffs, you want to make sure
that you have contingency baked into
your budget,” Wu said. “You want to
make sure that you try to take out all
of the uncertainty and make putting
together the capital stack more than a
paper exercise. This is the whole reason
why we're all here, building industry
relationships, making new friends. You
want to make sure that you can tap into
professional resources who can help you
with equity, with debt.”
The word from
Washington
Other speakers at LendingCon included
Republican Congressman Barry
Loudermilk of Georgia and Democrat
Congressman Darren Soto of Florida.
Both gave their assessments of the
economy.
“Depending on which side you're
on, you can make this out to be the
greatest economy, the worst economy,
or somewhere in the middle of cautious
optimism. There does seem to be a lot
of unsettling things,” Soto said. “I don't
know if that's just the economy is shifting
in a way that we're not prepared for it,
or if things really are this unsettling,
or you just have an administration that
attempts to do a million different things
in a million different times, which does,
of course, create uncertainty.”
Loudermilk said Trump’s One Big
Beautiful Bill, passed in July made
permanent the income tax breaks from
Trump’s first administration. That will
give consumers more money to spend on
travel and hotels.
“When their pay check only meets their
basic necessities, of housing, of food and
utilities, etc., they don't have the excess
income to spend on non-necessary
items,” Loudermilk said. “Really, the
entirety of our economy rests on the
philosophy that we need to make sure
that your blue collar workers all the way
up through your executives have more
money at the end of the day, after they
pay their taxes, after they pay the utilities
and rent.”
Consumers also must be given the
confidence that they can spend that
additional money, he said. Otherwise,
they may just save it.
“We want people to save, but we want
them to have enough to save and have a
Chantal Wu, CoStar’s senior director and hospitality
market analyst, said hotel developers should consider
higher costs from tariffs in their plans.
Daryl Cronk, senior economist at Oxford
Economics, said they are not forecasting a
recession, but the economy is slowing due to
uncertainty about tariffs and other federal policies.