Midwest U.S. Hospitality Market Report | Q1 2025

The Midwest hospitality sector in Q1 2025 demonstrated notable resilience amid evolving market dynamics. Key urban centers like Chicago and Minneapolis recorded steady RevPAR growth, while secondary markets such as Indianapolis, Columbus, and Des Moines showed renewed momentum. Cincinnati and Louisville outperformed regional benchmarks with strong event-driven and corporate travel demand. Investor interest remains robust, particularly in the full-service and extended-stay segments, positioning the Midwest as a core region for hospitality investment in 2025.

Investment Trends

Investor sentiment in the Midwest remains positive, with capital inflows targeting full-service, lifestyle, and extended-stay assets in strong secondary markets. Notable deal volume was recorded in Louisville, Chicago, and Columbus during Q1. Capital is increasingly flowing into value-add and repositioning opportunities, especially where PIPs are manageable and demand trends show resilience^[3]. CMBS activity has stabilized, with spreads narrowing and 10-year fixed rates hovering around 6.5%^[4].

Regional Performance Overview

In Q1 2025, the Midwest hotel market achieved a 3.3% year-over-year RevPAR increase, outperforming the national average of 2.2%^[1]. Occupancy rates averaged 64.5%, and ADRs held steady across most metro areas. Chicago led with a 4.0% increase in RevPAR, driven by corporate travel and event demand. Smaller markets like Columbus and Louisville reported above-average gains due to infrastructure investment and robust cultural calendars.

Looking ahead, the region is projected to maintain stable occupancy and modest ADR growth through Q3 2025, supported by continued recovery in group and business travel, while labor and operational cost pressures are expected to persist^[2].

Chicago: Urban demand drives growth

Chicago’s hospitality market posted a 4.0% RevPAR gain in Q1 2025, with occupancy reaching 66.2% and ADR averaging $165.00^[5]. The central business district outperformed, buoyed by financial services conventions and medical conferences. Investors focused on Class A full-service hotels with strong F&B or meeting space components.

Indianapolis: Sustained tourism momentum

Indianapolis experienced a record-breaking year in 2024, with 3.94 million hotel room nights booked — the highest in city history. This strong performance set a solid foundation for 2025, supported by a robust convention calendar and major sporting events. Ongoing demand drivers include the NFL Scouting Combine, national medical conferences, and new group tourism initiatives from Visit Indy, all expected to sustain elevated occupancy levels throughout the year.^[6]

Columbus: Tech and education fuel hotel demand

Columbus recorded a 3.6% RevPAR increase, driven by tech sector expansion and university-related travel. Occupancy reached 65.0%, supported by Intel’s ongoing multi-billion-dollar investment and regional development initiatives^[8].

Cincinnati: Healthcare and corporate demand drive growth

Cincinnati hotels experienced a 7.8% year-over-year increase in occupancy, reaching 68.5%, with ADR rising 4.2% to $132.50. RevPAR totaled $90.75^[9]. Demand stemmed from the healthcare sector (e.g., Cincinnati Children’s Hospital) and corporate travel from Procter & Gamble, Kroger, and Fifth Third Bank. CVG Airport reported a 3.5% increase in passenger volume in Q1.

Cleveland: Event-driven demand amidst economic challenges

Occupancy in Cleveland hit 63.2%, with ADR increasing 3.1% to $128.40 and RevPAR at $81.15^[10]. Major events like the NCAA Women’s Final Four and the total solar eclipse drove spikes in visitation. However, a limited construction pipeline and investor caution remain challenges amid broader regional economic headwinds.

Louisville: Sports and cultural events boost performance

Louisville’s occupancy reached 70.1% in Q1 2025, with ADR rising 5.0% to $142.30, resulting in RevPAR of $99.75^[11]. Events like the KHSAA Boys’ Sweet 16 and early Derby tourism supported robust demand. Minimal new supply allowed existing assets to maximize rate growth.

Emerging midwest submarkets to watch

Milwaukee, WI: RevPAR grew 3.2%, with occupancy reaching 68.2% and ADR at $140. Downtown revitalization and convention center activity are driving growth.
Des Moines, IA: RevPAR rose 3.0%, driven by a strong finance sector. Occupancy held at 64.0%, with extended-stay demand rising.
Kansas City, MO: Tech and medical investments fueled a 3.5% RevPAR increase. Leisure travel and centrality continue to bolster performance.

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