MIDWEST HOSPITALITY MARKET REPORT – Q1 2025
HOTEL PERFORMANCE • REVPAR TRENDS • CAPITAL MARKETS • FINANCING INSIGHTS
Q1 2025 | Midwest Hospitality Sector
This Midwest Hospitality Market Report provides Q1 2025 insights for hotel owners, investors, and lenders evaluating performance, RevPAR trends, and capital markets conditions across key Midwest metros.
The Midwest hospitality sector demonstrated notable resilience in Q1 2025 despite evolving economic headwinds. Major metros such as Chicago, Minneapolis, and St. Louis recorded steady RevPAR growth, while secondary markets including Indianapolis, Columbus, Des Moines, and Cincinnati posted renewed momentum. Investor sentiment remains robust, particularly in the full-service and extended-stay segments that benefit from corporate travel, medical demand, and regional events.
Financing conditions have stabilized, with lenders favoring experienced sponsors, strong in-place cash flow, and assets with manageable PIP requirements. Across the region, operators are focusing on ADR integrity, margin protection, and tactical expense management as supply remains in check and regional travel demand continues to normalize.
Executive summary – Q1 2025 Midwest hospitality
The Midwest remains one of the most stable hospitality regions in the country, supported by business travel, education, financial services, health care, and professional sports. Demand patterns vary by metro, but overall occupancy, ADR, and RevPAR remain aligned with national averages. Chicago, Minneapolis, and Milwaukee posted strong corporate and convention-driven demand, while Indianapolis, Columbus, and Louisville benefited from events and medical-related travel.
As outlined in this Midwest Hospitality Market Report, RevPAR performance strengthened across a mix of urban, secondary, and tertiary markets, driven primarily by ADR gains and modest occupancy improvements.
Owners and operators continue to prioritize revenue management, staffing optimization, and targeted capital improvements to protect margins. With construction financing still constrained, new supply remains limited across most major metros, strengthening the competitive position of existing assets.
Investor interest in the Midwest remains healthy. Capital is increasingly targeting full-service and lifestyle assets near universities, medical centers, and logistics hubs—segments with durable demand drivers and higher income visibility.
Regional performance overview
In Q1 2025, the Midwest hotel market achieved a 3.3% year-over-year increase in RevPAR, outperforming the national average. Occupancy levels averaged roughly 64–66%, supported by event calendars, medical visitor demand, and corporate travel. ADR held firm across most metros, with Chicago leading rate improvements among urban markets.
Group and convention demand showed mixed performance. Chicago and Indianapolis recorded strong event-driven compression, while smaller markets such as Columbus and Louisville benefited from university events, youth sports, and cultural programming.
Looking ahead, the Midwest is positioned to maintain stable performance through 2025. Limited new supply, strong university and medical anchors, and expanding manufacturing and logistics demand continue to support baseline occupancy and pricing stability.
Market insights – key Midwest metros
Chicago – corporate & convention demand
Chicago posted a 4.0% increase in RevPAR in Q1 2025, with occupancy reaching 66% and ADR averaging $165. Corporate and financial services segments were strong contributors, and major conferences within the McCormick corridor supported robust compression. Investors continue to target Class A and premium select-service hotels positioned near key business districts.
Indianapolis – tourism & sports momentum
Indianapolis experienced a record-setting 3.9 million hotel room nights booked in 2024, setting the stage for sustained strength in 2025. Q1 demand benefited from event calendars, NCAA tournaments, medical conferences, and citywide conventions. New group initiatives and tech-sector hiring are expected to support continued occupancy stability throughout the year.
Columbus – tech, education & healthcare travel
Columbus recorded a 3.6% RevPAR increase in Q1 2025, driven by university-related activity, tech-sector expansion, and major logistics investments. Occupancy held steady around 65%, with ADR normalization contributing to rate integrity. Investors continue to monitor Intel’s multi-billion-dollar campus development and its long-term impact on regional lodging demand.
Cincinnati – healthcare & corporate demand
Cincinnati hotels achieved a 7.8% year-over-year increase in occupancy, rising to 68.5%, with ADR improving 4.2% to $132. Demand was led by medical travel, regional hospital systems, and increased corporate visitation tied to Procter & Gamble, Kroger, and Fifth Third Bank. Airport-related travel at CVG also supported strong extended-stay demand.
Cleveland – event-driven demand
Cleveland’s occupancy reached 63.2% in Q1, with ADR increasing 3.6% to $128.40 and RevPAR reaching $81.15. Citywide events, conventions, and sporting calendars provided compression across key weekends. Industrial investment, new distribution facilities, and population stabilization efforts continue to support baseline tourism and business travel.
Louisville – sports, culture & tourism
Louisville posted occupancy of 70.1% in Q1 2025, with ADR rising 5.0% to $142.30 and RevPAR reaching $99.75. Cultural events, early tourism tied to the Derby season, and limited new supply allowed operators to maintain strong rate performance.
Emerging Midwest submarkets to watch
- Milwaukee, WI: RevPAR grew 3.2%; occupancy reached 68%; ADR averaged $140. Revitalization activity and convention center expansion supported growth.
- Des Moines, IA: RevPAR rose 3.0%, driven by finance and insurance demand; occupancy held at 64% with extended-stay strength.
- Kansas City, MO: Tech and medical investments fueled a 3.5% RevPAR gain; leisure travel and centrality contributed to performance.
Capital markets & financing trends
Lending conditions in the Midwest improved modestly in Q1 2025, with banks selectively increasing their hospitality exposure under stricter underwriting requirements. Pricing remains stable, with spreads narrowing slightly for well-sponsored, stabilized assets. LifeCo lenders remain competitive for top-tier properties, while SBA and bridge lenders continue to support acquisitions, partner buyouts, and renovation-driven repositionings.
Sponsors seeking financing in the Midwest are leveraging:
- Bridge loans for time-sensitive acquisitions, PIP execution, and repositioning strategies.
- SBA 7(a) and 504 programs for owner-operators acquiring stabilized or value-add hospitality assets.
- CMBS-like executions for stabilized hotels requiring long-term, non-recourse structures.
Challenges & opportunities for Midwest hotel owners
Operating pressures
Labor shortages, rising wages, and increasing insurance costs continue to pressure margins. Operators are adapting through cross-training, automation tools, and tighter scheduling aligned with seasonal demand.
Renovations, conversions & PIP execution
Many Midwest hotels face brand-mandated renovations or opportunities for soft-brand conversions. Lenders increasingly require detailed capex schedules, stronger equity contributions, and credible management plans before approving financing.
Opportunistic buying conditions
With few distress-driven sales in 2025, investors are targeting under-managed or outdated assets where capital investment can unlock meaningful value. Markets with stable demand generators—universities, hospitals, manufacturing hubs—present attractive long-term entry points.
About Cornovus Capital
With over 70 years of combined experience, Cornovus Capital is a trusted financial partner specializing in business financing, commercial real estate lending, and hospitality funding solutions. We design structured capital strategies that help businesses acquire, expand, and optimize operations, ensuring long-term growth and stability.
Our expertise spans SBA 7(a) and 504 programs, CMBS and LifeCo financing, private capital solutions, and structured debt strategies. Focusing on execution precision and lender coordination, we guide businesses through complex financial structures with certainty and efficiency.
Connect with Cornovus Capital
Evaluating a hospitality acquisition, refinance, or renovation in the Midwest? Cornovus Capital provides underwriting, capital planning, lender engagement, and structured financing solutions that keep hotel transactions moving with certainty and efficiency.
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