Seattle’s hotel scene may look busy from the sidewalk, but the books tell a different story. Profits slipped last year as demand softened and day-to-day costs climbed, cutting into room-level margins across downtown and airport properties. Local market snapshots and national industry data show that occupancy and modest rate gains were not enough to outrun higher staffing, utility and operating expenses. A big culprit: a sharp pullback in international visitors, especially Canadians, who usually make up the bulk of Seattle’s overseas guests.
Industry report: profits under strain
A report by the American Hotel & Lodging Association found that rising operating expenses left gross operating profit per available room stuck at roughly 90% of 2019 levels, a sign that topline revenue growth has not fully offset higher costs, according to AHLA. The association characterized 2025 as a year marked by stubborn cost inflation and an uneven recovery across markets, which weighed on profits even where occupancy held its ground.
Seattle numbers show the dip
On the home front, a Kidder Mathews year-end market brief shows Seattle’s trailing 12-month occupancy sliding to about 69.0% in Q4 2025, while average daily rate edged down to roughly $180 and RevPAR slipped to about $124. That combination shrank the pool of room revenue hotels use to cover payroll and utilities, Kidder Mathews reported. The brokerage singled out “steep drops in international travelers, particularly from Canada” as a key factor behind the softer demand in 2025.
Canada drove most of the international decline
Forecasts from Tourism Economics projected a 26.9% decline in international overnight visitors to Seattle in 2025, the steepest fall among major U.S. destinations, and linked nearly all of that drop to fewer trips from Canada, according to Tourism Economics. Official Canadian figures show that outbound travel from Canada to the United States fell sharply in 2025, reinforcing the scale of the pullback and its heavy impact on border markets such as Seattle, according to Statistics Canada.
Visit Seattle: risk now, opportunity ahead
Visit Seattle reports the city still drew 2.4 million international visitors in 2024, with Canada supplying roughly 73% of those arrivals, a ratio that highlights just how exposed the local market is to any shift in Canadian travel patterns, according to Visit Seattle. “Seattle’s global appeal continues to grow and evolve,” Tammy Canavan, Visit Seattle’s president and CEO, said in the group’s release, as the organization ramps up marketing and route development in the run-up to the FIFA World Cup in 2026.
How hotels are responding and what to watch
Hotel operators are pivoting hard toward domestic and group business, trimming hours on back-of-house shifts and repricing packages in an effort to protect margins, while industry analysts point to rising labor and operating costs as a persistent drag, CoStar Analytics reported. Trade groups note that some relief may be on the horizon: AHLA’s state-of-industry release says that major events such as the FIFA World Cup and America250 could boost travel in 2026, but the association cautioned that turning that resilience into lasting growth will hinge on easing policy headwinds and keeping cost pressures in check, according to AHLA.
