As we near the midpoint of the year and look ahead to budgeting for 2026, the current tariff war represents a major inflection point for our industry – and a test of strategic agility for commercial leaders, and specifically revenue managers.
NB: This is an article from TCRM, one of our Expert Partners
Subscribe to our weekly newsletter and stay up to date
Consumer Behavior & Demand Shifts
Despite upbeat intentions – 88% of Americans still plan summer travel – the tariff-driven squeeze is reshaping behavior. According to Expedia/Deloitte data, average spending initially rose 21% YOY in March but cooled to 13% in April once tariffs landed. Consumers are pivoting: shorter trips, road travel, and less expensive lodging. That’s the new reality we must forecast into our models for the foreseeable future.
Cross-border traffic is weakening, too. Canadian inbound searches to U.S. hotels declined from a nearly 25% share in 2024 to just 15% in March. With political backlash spurring a Canadian boycott, leisure and corporate demand from Canada is expected to lag into 2026.
European visitation has also softened, down 7% in early 2025, although hotels are rebounding with aggressive pricing, with some pushing rate cuts of up to 25% to win back bookings.
Squeezed Margins & Rising Costs
Tariffs aren’t limited to cars and other goods – they hit hotels directly. Everything from imported linens to HVAC equipment is more expensive. Skift cited an article on industry-wide renovation delays, noting that materials and furnishing costs are surging.
These inflationary pressures have led retailers and wholesalers to raise prices on tariff-driven goods, with increased costs passed on to buyers. Expect this to manifest in rising F&B, amenities, and other FF&E replacement costs on-property.
Lower Airlift and Intermittent Business Travel
The ripple effects of the tariff war are being felt strongly across domestic U.S. air travel. According to Reuters, U.S. summer flight bookings are down approximately 10% year-over-year, with passengers increasingly hunting for deals, delaying trips, or opting for shorter regional routes. This trend is causing major carriers to withdraw or revise forward guidance, citing “reduced demand and shorter booking windows.”
Forecast Adjustments: Q3‑Q4 & 2026 Budget Posture
As we cross the midpoint of 2025, here is my outlook for the remainder of the year. Caveat: My crystal ball is not perfect, and not all markets behave the same way. Review your recent trends for specific guidance:
