Q1 2025 Arizona Hospitality Market Report
Key Findings
- The 2025 forecast indicates flat growth in ADR and RevPAR at -1.7% and -0.2%, with occupancy increasing by 0.2%.
- The Scottsdale submarket continues to outperform, recording the highest ADR and RevPAR in the region, commanding $30 over the Phoenix Central (Downtown) Submarket.
- Phoenix has one of the highest under construction room counts in the county at 4,475 rooms.
Arizona Travel
- Total AZ Passengers (January 2025): 4,523,829
In January of 2025, a total of 4,523,829 passengers (enplanements/deplanements) were recorded in Arizona. Overall spending stemming from tourism in AZ is roughly $30 billion, equating 6.4% of the states GDP. An estimated 185,000 jobs exist in Arizona as a result of tourism and travel.
Phoenix Market Performance
Phoenix’s hotel market is dynamic as different types of travelers shape demand. The market welcome vacationers, business groups, and corporate groups. After a strong comeback in recent years, hotel performance is starting to level out, with monthly numbers showing small shifts across all hotel categories. The market continues to benefit from a robust event calendar based by professional sports and outdoor leisure. Major events earlier in the year, such as the Waste Management Open and 2025 Spring Training supplied major demand. Looking ahead, secured events including the 2026 NCAA Women’s Final Four and the 2027 NBA All-Star Game are expected to generate long-term demand among sports fans.
While current occupancy remains at 68.6%, somewhat below 2019 levels of 70%, this performance is notable given the market’s 13% room inventory expansion since 2019, which included an expansion of 85 hotels with 10,000 rooms. Occupancy growth will remain stable seeing as market supply is anticipated to rise by 3.4%.
By the Numbers
- Occupancy: 68.6%
- ADR: $174.48
- RevPAR: $119.68
- Sales Volume: $65.9M
- Under Construction: 4,475 rooms
- Sales Price/Room: $306,853 | Source: CoStar Group | As of March 2025
Performance By Class
| Q1 2025 | Rooms | Occupancy | ADR | RevPAR |
| Luxury & Upper Upscale | 21,935 | 65.2% | $275.33 | $179.48 |
| Upscale & Upper Midscale | 32,123 | 70.9% | $153.67 | $108.95 |
| Midscale & Economy | 18,373 | 66.2% | $88.27 | $58.40 |
Source: CoStar Group
Under Construction
Hotel rooms under construction continue to climb in Q1 2025. The pipeline is reaching a fresh 10-year high of around 4,500 rooms across 29 properties under construction. Phoenix has one of the greatest under construction room counts in the U.S., as well as the largest share of under construction inventory among the top 40 U.S. markets (6.2%).
Sales
The sale of the Waldorf Astoria Resort in May of 2024 accounted for $705M of the year’s sales volume. This sale pushed Phoenix’s 12-month sales volume to $1.2 billion, making it one of the most active markets in the United States. While middle-tier hotels dominate hotel trade activity, Phoenix nevertheless has one of the greatest hotel investment sales volumes among the top 25 cities. The market currently displays 42 properties with CMBS loans maturing in two years, including 22 properties on the watchlist for distress, however only one is in special servicing.
Submarket Highlights
| Submarket | Inventory by Rooms | ADR per Room | RevPAR per Room | Under Construction | Occupancy |
| Mesa | 5,341 | $121.34 | $81.45 | 444 | 84.0% |
| Chandler | 10,454 | $140.42 | $98.54 | 637 | 83.5% |
| Tempe | 7,357 | $146.48 | $96.25 | – | 79.2% |
| Tucson | 16,767 | $151.55 | $92.64 | 122 | 77.4% |
| Scottsdale | 17,861 | $256.83 | $168.69 | 554 | 79.8% |
Source: CoStar Group
