Northeast U.S. Hospitality Market Report | Q1 2025

The Northeast U.S. hospitality sector is undergoing a high-friction market recalibration in Q1 2025, marked by stalled development pipelines, zoning constraints, and rising capital costs. While New York remains constrained by legacy labor and entitlement bottlenecks, capital is flowing into secondary growth corridors like Boston, Philadelphia, and mid-tier metros where event-driven demand and group travel are showing resilience.^[1]

As both capital advisor and owner’s representative, Cornovus Capital supports investors navigating the Northeast’s layered entitlement risk and cost-overrun volatility. This report summarizes early 2025 RevPAR performance, supply-demand dynamics, and repositioning trends in markets where real-time underwriting complexity is shaping investor behavior.^[2]

Regional Performance Overview

Across the Northeast, Q1 2025 marks a period of recalibration, not retreat. While the macro sentiment remains cautious, key markets such as Boston, Philadelphia, and select second-tier metros have quietly posted strong year-over-year gains in RevPAR and occupancy. Urban leisure travel has largely stabilized, while group and convention demand is outperforming projections in many legacy conference centers.^[1]

According to STR’s January 2025 data^[2], average daily rates (ADR) across Northeast gateway cities averaged $198, with top-performing submarkets exceeding $280. Meanwhile, AHLA’s industry outlook notes that 53% of hotel owners in the region expect group travel to increase in 2025, supported by a resurgence in corporate and institutional bookings.^[3]

However, underwriting has grown materially more complex. Property taxes, labor costs, and zoning friction continue to compress deal margins and delay new supply. Successful execution in this region now requires not just capital, but a strategic capital markets partner who can navigate entitlement risk, political cycles, and repositioning thresholds with precision.^[4]

Boston: Tight Supply, Elevated Yield

Boston continues to demonstrate its strength as a high-yield, low-supply hospitality market in Q1 2025. According to STR’s latest performance data, RevPAR in the Boston metro increased by 8.4% year-over-year, while ADR surged to $236.71, surpassing pre-pandemic highs by more than 12%.^[2]

Despite rising demand, development pipelines remain well below historic norms. According to the Boston/Cambridge Lodging Market – Year-End Review and 2025 Outlook, projected deliveries for 2025 are expected to be more than 90% below the market’s 10-year average, with only four properties set to open this year—including a 399-key citizenM and a limited-service boutique in Cambridge.^[5]

Capital allocation continues to concentrate in walkable submarkets, where limited product availability and rising replacement costs are placing upward pressure on valuations. Boston ranked fifth nationally in JLL’s 2025 Global Hotel Investment Outlook, trailing only New York City, Miami, San Francisco, and Charleston.^[6]

This supply-demand imbalance is giving owners of stabilized assets leverage in today’s market. Institutional capital is now competing aggressively for hotel product in Boston’s legacy convention zones, where midweek compression and embedded repositioning opportunities are driving premium pricing.^[7]

Philadelphia: Rebound Accelerates

Philadelphia’s hospitality sector experienced a significant resurgence in Q1 2025, leading the U.S. in key performance metrics. According to STR, the city achieved a 10.9% year-over-year increase in occupancy, reaching 73.0%, and an 18.5% rise in RevPAR to $119.68, marking the highest gains among the Top 25 U.S. markets.^[8]

This robust performance is attributed to a combination of factors, including a diverse employment base, increased convention activity, and a rise in international tourism. The HVS Hotel Valuation Index projects continued occupancy growth in 2025, supported by these positive trends.^[9]

Development activity is also on the rise. Notably, a long-planned 59-room hotel project in the Fishtown neighborhood has shown signs of moving forward, indicating renewed investor confidence in the market.^[10]

Overall, Philadelphia’s hospitality market is poised for sustained growth, with strong fundamentals attracting both domestic and international investors seeking opportunities in a dynamic urban environment.

Providence: Boutique Momentum with Institutional Eyes

Providence is experiencing a notable surge in boutique hotel development as of Q1 2025. The city’s historic charm and vibrant arts scene have made it an attractive destination for travelers seeking unique accommodations. Notably, The Beatrice, a 47-room luxury hotel in downtown Providence, has garnered attention for its modern amenities and rooftop dining experience.^[11]

Additionally, The Dean Hotel, housed in a renovated 1912 building, continues to attract guests with its blend of historic architecture and contemporary design.^[12] These developments reflect a broader trend in Providence’s hospitality sector, where boutique hotels are capitalizing on the city’s cultural appeal and growing tourism industry.

Emerging Northeast submarkets to watch

Beyond Boston, Philadelphia, and Providence, several secondary Northeast cities are drawing investor attention in Q1 2025. While Cornovus Capital has not historically been active in these markets, we are closely tracking them as potential expansion points for clients seeking yield, stable demand, and limited competitive pipeline.

In Hartford, CT, major insurance carriers continue to drive weekday room demand, while hotel development has remained muted—creating an opportunity for repositioned limited-service assets.^[13] Portland, ME is now recognized as one of the top small-market RevPAR performers in the U.S., with a vibrant boutique sector and highly walkable downtown core.^[14]

Albany, NY benefits from consistent event demand and government-related travel, while New Haven, CT has seen rising investor interest driven by Yale University and historic property repositioning near the downtown medical corridor.^[15] These markets offer strategic entry points for investors pursuing Northeast hospitality outside of traditional gateway metros.