Hospitality Report 2025: Hotel design prioritizes storytelling – Nov 2025

By Jessica Chevalier

The hospitality market is in something of a lull currently, with new construction activity low and renovation more active. In spite of or, perhaps, because of this, designers serving the sector report a desire for design that stands out, telling a story and embodying the place in which the property resides. Flooring-wise, durability and cleanability remain top priorities, as looking fresh and current until the next scheduled renovation is a key factor of success for hospitality environments.

A TOUGH MARKET 

“It’s not a good story,” says Jan Freitag, national director of hospitality analytics, at CoStar Group of the hospitality market’s 2025 performance. “Room rates are bumpy, stuttering. Year-to-date in August, room rates were up 1%, which is less than inflation. If revenues rise by less than expenses, that means price pressure.” 

Freitag notes that it’s “a story of bifurcation: the upper end is doing a lot better than the lower end. Room rates for luxury are up 2.9%, but for economy, down 1.2%, which means, at that level, there is no growth at all on the top line, but all expenses are higher.”

Of the six levels-economy, midscale, upper-midscale, upscale, upper-upscale and luxury-the bottom levels have declined by a larger percentage in room rates year over year.

“This isn’t as bad as the pandemic or the great financial crisis of 2008 to 2009 or September 11, but if you remove those recessionary periods, this walks and talks like a recessionary period,” he says.

There is a confluence of reasons why the U.S. hotel industry is not doing well, Freitag reports;

• The on-again-off-again tariffs have infused uncertainty into Fortune 2000 companies. Because they can’t foresee what input costs will be, they seek to control the margins by controlling expenses, including travel and training, which has led group travel demand declines five months in a row. 
• Leisure consumers are facing higher inflation, which leaves less for discretionary spending such as travel and tourism. This is why there has been deceleration on the lower-end chain scale. 
• While the dollar is weaker than it was a year ago, that hasn’t fueled inbound travel. There are fewer international inbound travelers due to the rhetoric from the Trump administration. “In particular, the rhetoric around Washington, D.C. is tough,” says Freitag. “Trump says it’s dangerous, which impacts corporate transient travel, leisure travel and international inbound travel.” Interestingly, there are 2% more Americans going abroad than last year. Airlines’ earnings calls report that the premium passenger is still flying. Also, luxury room rates in many European countries are healthy.  

Additionally, for the hospitality industry, labor is a challenge because a percentage of the workforce is foreign-born, with some undocumented and others simply afraid to come to work.

“The macro number, when September’s preliminary data comes out, will show two quarters of RevPAR (revenue per available room) decline with a high likelihood that Q4 will be negative too, due to the challenging comp of Q4 2024 when hurricanes devastated the Carolinas and people were displaced, which drove up occupancy,” says Freitag. “There is not an official definition of what a recession is for the hotel industry, but if I had to guess, I’d say two quarters is a good measure.”

The number of rooms in construction continues to decelerate with 137,000 year-to-date through September, so the industry is not overbuilding. That number stood between 150,000 and 160,000 for a decade. This is not good news for flooring manufacturers serving the sector.

“Building has slowed because interest rates are high,” explains Freitag. “It’s hard to get a loan, and hotels are inherently risky. The people lending today want a lot for their money. In addition, tariff costs for furniture, fixtures and equipment (FFE) are high, and then there is the lack of access to labor. All those things mean we aren’t building hotels. The asterisk is that all demand and supply are local, so there are markets-Nashville, Dallas, New York, etc.-with healthy number of new rooms, but those are the outliers.”

Planning for new rooms is fairly high, but some plans are in a holding pattern due to roadblocks with financing, land and costs-and some may have been in statis for several years, so, ultimately, that figure could even be down by a percentage, says Freitag.

Acquisition activity for Q3 was around $4.3 billion, roughly a third below where the market was a year ago and $1 billion below Q2 2025. While 60% of the approximately 1,100 total acquisitions were for properties of less than $10 million, only five were for over $100 million. 

DESIGNER PERSPECTIVE ON ACTIVITY

Though the numbers don’t paint a positive story, the sector’s overall activity level can feel different to designers in the field, due to the nature of the work cycle. And, at times, less demand at the consumer end of the market can provide opportunity for renovation work. 

“We haven’t felt a dip,” says Molly Dunn, senior designer with Parker-Torres Design. “However, where the rubber has met the road as of late is with budgets.” Dunn’s work is focused on four- and five-star properties. 

“The one wild card seems to be the tariffs,” Dunn continues. “I don’t feel like budgets are changing, but they sort of have to. What we budgeted for lighting not long ago we now double, so we have to save money elsewhere.” She adds that the extended nature of design timelines makes this especially complicated. “Between the time we get an RFP (request for proposal) to actually creating the design, so much time has passed and so many things have changed that it’s hard to come up with a realistic budget at the outset.” 

Dunn reports that the majority of Parker-Torres’ current renovation work is at resorts. “We have a lot of work in Florida and Arizona. Activity definitely seems more leisure-heavy,” she says.

As for trends in the market with regard to activity, senior associate with ForrestPerkins Katherine Dalton reports, “Renovation dominates for sure. I would say new construction is more selective, with high-end and lifestyle leading growth. Owners are investing more in areas where guests connect, such as lobbies and wellness zones.” ForrestPerkins is Perkins Eastman’s luxury hospitality and residential interiors design studio.

Adds Sara Talleux, principal and hospitality interior design leader with DLR Group, “Right now, business activity at DLR Group is strong in both renovation and new construction, with a notable uptick in major new-build projects that had been on pause for several years. Regionally, the South and Southeast are seeing particularly high demand for new builds. While budgets are holding steady, they aren’t increasing at the same rate as costs due to tariffs, so value and efficiency remain key considerations.”

She continues, “In new construction, growth is focused on smaller cities and rural areas where demand for rooms is strong, while renovations are concentrated in larger urban centers. Brands are expanding and differentiating their offerings, particularly in the Southeast, Texas and Arizona, where tech-driven growth is fueling demand. Urban properties are also converting to new brands, bringing fresh offerings and renewed energy to existing hotels.”

“All around the Tahoe area, I am seeing a trend of smaller properties-some bed-and-breakfast style, some motels-that are being transformed into small boutique properties,” says Marcio Decker, founder and lead creative at Aspen Leaf Interiors. “I am also seeing large properties like the Caesar Tahoe being completely renovated with key brand-name restaurants being used to anchor the rebranding of the property. My pulse in Las Vegas-I have an office there-is that, of the large hospitality brands, Fontainebleau was the last that made a big boom. It’s spectacular. But that was in December 2023, and I can’t think of any properties that made a boom in 2025.”

Elizabeth Von Lehe, principal and senior design leader at CannonDesign, adds, “From what I have heard directly from the industry, for some of the big brands-Accor, Hilton and Marriot-adaptability is a throughline. Many brands aren’t doing a lot of new builds but a good amount of refreshing and adapting brands. In this, materials like flooring have a big role. Strategic enhancements can make a space feel new or relevant for a new consumer. They are adapting properties they already have, and that’s an opportunity for FFE.

“While there has been a bit of a slowdown due to economic uncertainty, what I have been seeing is a bit more creativity and interest in creative brand development and execution. The AutoCamp brand for Hilton is an example-and you can find some version of that with most of the large brands. It will never be their bread-and-butter, but it is their bleeding edge for something different.”

NARRATIVE NURTURES 

While the design narrative has always been an important part of the process, today Dunn sees it carrying even more weight with brands, as they seek to differentiate their properties not only from the competition but also from one another. 

“Speaking to higher-end luxury, we have always been asked to start with a story,” the designer explains. “Storytelling is huge in the development of concepts and designs, but it’s becoming more deeply rooted in creating immersive guest experiences and creating touchpoints. Borrowing from residential, we are asked to do things that are more curated, less expected. For luxury brands, we are curating accessories and coffee table books for guest rooms, and they may offer a signature cocktail when a guest arrives.”

Dunn explains that this approach is about the depth of the experience, not just highlighting, for instance, one aspect of the property’s history in the design, but building a story through the design that is dynamic, memorable and rooted in place.

Placemaking is an important aspect of hospitality, as it builds value and creates incentives for guests to visit a particular property, making the stay a part of the experience of travel rather than simply a generic place to rest their head. 

“Hospitality spaces allow people to be someone else for a minute,” says Von Lehe. “That’s true of all interior design, but if you are going to sleep in a different place, you are, in a sense, getting to be a different person. Sometimes that is sultry and sexy, but more often than not, it’s really about letting it be a breath of fresh air and escape. It’s interesting to me to create a destination that lets someone be embodied in a storyline.”

Dalton recently completed work on La Bahia, a new 155-key boutique hotel in Santa Cruz, California that celebrates place in a tactile way with coastal architecture, a terracotta roof and white plaster walls. For the finishes, the design team prioritized “authentic materials with a sense of craft,” she explains. “Materials that were or looked hand-finished. What can we put in that will stand the test of time and not be ripped out?” 

For the La Bahia team, the solution was hand-glazed encaustic tiles, warm limestone in the lobby to bring in a timeless, sun-washed feel; custom Axminster in the ballrooms, meeting rooms and guest corridors; and hand-tufted rugs to add softness and help with acoustics. Dalton describes the completed five-star property as “a laid-back jewel box.” As part of the destination aspect of the project, the ownership retained an existing belltower on the property, which is to be turned into a guest house. 

SECTOR CROSSOVER

“One of the more interesting things that’s been happening a ton is crossover between industries,” says Dunn. “And you would be surprised at how hard it is to get folks to understand how similar the sectors are. For example, a boutique hotel and a medical facility with multiple hospitality spaces in it: both have lounges, workplace components and will need some of the same fit and finishes.” 

Over in the last several years, segments of the commercial market have been increasingly influenced by hospitality design, borrowing from its comfort and style aspects to create more hospitable environments in the office, in healthcare settings or in education spaces. For hospitality designers, this has opened up different opportunities to utilize their expertise. 

Parker-Torres designs both renovation and new construction projects, with renovation a larger part of its portfolio. Currently, one of the company’s new construction projects is a residential midrise building called the Four Seasons Private Residences Orlando at Walt Disney World Resort that is connected to the Four Seasons Orlando. Buyers of the three, four and five-bedroom villas have access to the hotel’s amenities. 

Because the residential project is adjacent to the hotel, Dunn looked to the hotel’s design as an inspirational template. The hotel has a porcelain mosaic floor in the shared lobby space, so Dunn opted to create a similar style floor in marble, which is suitable for the residential side, where foot traffic won’t be as heavy.

The concept encompasses three main inspirations-Spanish Mediterranean architecture to match the hotel; nature, especially the protected wetlands and lush naturescape of Orlando, lush and tropical; and Disney-with the goal of a finished space that is calming and relaxing for residents. 

The shared space is all hard surface flooring with area rugs under seating groups. The large-scale, geometric and bold laser-cut marble pattern features three colors: cream, caramel and periwinkle grey, all of which are neutral and warm with subtle contrast. The pattern runs from the entry to a seating group at the back of the space with a “runner” from reception to the amenity spaces and down the corridor toward the pool amenities. 

Similarly, Decker is working on a renovation of shared spaces at the Palisades Tahoe, where the privately owned units are rented out like hotel rooms. The rental process is managed for owners by the homeowner’s association.

For the lobby space at Palisades Tahoe, Decker selected a quartzite flooring in green-gold tones, which harkens to the outdoorsy setting. Decker characterizes the quartzite as “a very durable material.” The lobby will have area rugs under seating areas. These will be secured to the floor with a tape suited for the purpose.

For the hallways, he selected a Shaw broadloom product with a brushstroke pattern reminiscent of mountains. The broadloom is a great choice, says the designer, to manage acoustics and provide a “gentle” experience underfoot. The design will be rolled out across the resort’s five buildings in stages. 

Von Lehe has taken hospitality design into healthcare, working on Memorial Sloan Kettering Cancer Center’s Josie Robertson Surgery Center, where she applied the hospitality concept of comfort to a setting in which it is greatly needed. 

“It’s wonderful to design something for well-to-do people having a night out, but putting that love into a space that will meet people in their most difficult time feels really good,” the designer says.

On the business end of design, these opportunities provide project work when the hospitality market is less robust, which may explain why some of these projects are top of mind for designers this year. 

HARD SURFACE STORY

There are public and private areas of the hospitality space, and these are treated differently due to the nature of their use, though they share the goal of providing a particular experience for the customer, so the finishes must tell the same story and offer the same quality. 

“Hard surface flooring has reshaped hospitality design by expanding both aesthetic and functional possibilities,” says Talleux. “Advances in technology are pushing the boundaries of texture and dimension, allowing materials to convincingly mimic natural stone, wood or even carpet.”

For the 188-key Vanguard Hotel in Ann Arbor, Michigan, which blends modern sophistication with an appreciation for the university’s legacy and spirit of intellectual exploration and travel, Talleux chose a stone-look porcelain with mosaic insets for the lobby; European oak hardwood and porcelain pavers, representing the cobblestone paths of France, for the French brasserie; and hardwood in a chevron pattern, representing lines of an envelope, for guestrooms. 

LVT began making its way into guestrooms prior to the pandemic and accelerated amid Covid due to concerns about cleanliness as a means of reducing germ transmission. This flooring trend began in the lower-scale levels with better-quality LVT moving up the chain to mid-scale properties and even some luxury spaces, as well. 

Designers have mixed feelings about the use of the material in guest rooms. While acoustic mitigation around LVT has improved in the ensuing years, the problem remains, particularly around vertical noise transference between floors. This issue is easier to address in new construction, where infrastructure can be built to support the use of hard surface flooring, rather than an existing facility, where the infrastructure has been built for soft surface and must be effectively retrofitted. 

In addition, for all its improvements in aesthetics, LVT lacks the comfort underfoot that soft surface provides. The material is also more slippery than broadloom, which presents a safety issue. 

That said, it is often reported that hotel guests like hard surface flooring in the guest rooms, as the cleanliness level is easier to assess. 

Some designers are also excited about the opportunities the material affords. Decker reports, “More than ever, we are realizing that LVT is a wonderful choice for guest rooms. While I advocate for the use of carpet in corridors, the guest room is different. People are sensitive to allergens, and LVT renders a room that feels cleaner. It’s easier for maintenance, and guests feel more comfortable knowing that the floor was mopped-and that they can see that.”

Von Lehe, however, is not a fan, noting, “LVT is cold, and there are a lot of other downsides. It’s not pleasant to walk on. There are safety concerns and acoustic challenges. It’s not a beloved product. There have been improvements on the eco-friendly side of it, but it’s still not very eco-friendly.”

Talleux doesn’t see LVT as a product suited for high-end hospitality. “LVT isn’t typically moving into higher-end hospitality projects, as clients in the luxury segment still prefer organic materials like real wood, natural stone and handmade ceramics,” she says.

However, Dalton takes a practical approach. While La Bahia is a luxury property, it’s beachfront location made LVT the best choice. “This project ended up moving to LVT in guest rooms,” Dalton says. “Ownership was looking for high-quality products that would surpass the seven- to ten-year mark. LVTs have come so far with added texture, so they don’t feel printed. They are durable. When applied thoughtfully, I think it is only a discerning eye that can determine the difference between the new upscale LVTs and hardwood.”

Dunn also sees LVT considered for specification by properties at the higher end of the market. “We do replace ‘for like’ a lot in renovation,” she notes. “Right now, for instance, we are working on a guestroom renovation project that has marble with a hardwood entry. The hardwood was beat up, so we are replacing it. We mocked it up with both hardwood and vinyl. We promoted the hardwood because of the color and nature of the property, but it wasn’t a matter of the brand saying, ‘We don’t want to review LVT.’ There are numerous luxury brands open to LVT, and one in particular pushes for it to be used in its public areas.”

As for LVT’s most common inspiration material, hardwood remains something of a darling for high-end properties-warm, authentic and conveying a sense of quality. However, as a hard surface material, it does have challenges around acoustics and lack of warmth underfoot. In properties high-end enough to use hardwood in guest rooms, these challenges must be managed thoroughly. 

“With true hardwood, you want a proper underlayment so that you have acoustic mitigation,” says Dunn. “Nothing is worse than having a guest room where you hear sound. As we are moving towards more residential-feeling spaces, people expect hardwood in guest rooms. It is a challenge acoustically, but we have more opportunity to layer back in warmth through rugs, textiles and lighting.”

While some designers shy away from the use of hardwood commercially, successful installations are possible with the right specifications. Dunn notes that, when using hardwood, you “have to pay attention to the wearlayer. That’s what the hospitality brands need to understand. You get what you pay for. Brands will often want to go with the company that their contractor recommends, but I always compare wearlayers, and I want texture that is more forgiving or unfinished.”

“I like Carlisle Wide Plank Floors,” says Dalton. “I prefer solid wood when appropriate. There is a warmth and depth that engineered can’t fully replicate.”

Format-wise, Talleux’s hardwood selection is driven by the project type and location. “In urban settings, we tend to see narrower planks that create a refined, contemporary look, while rustic or resort-style projects often favor wider planks with more texture and character,” the designer explains. “Patterns like herringbone are popular, since they’re easier to source and install than custom chevron designs. Ultimately, hardwood selection comes down to finding the right manufacturer who can deliver the desired aesthetic with the durability required for hospitality environments.”

Talleux notes that engineered wood, which is durable and offers the look of real wood at a competitive price, is meeting the need for long-lasting flooring that can withstand the high traffic areas in hotels. “This aligns with the current hotel renovation cycle, where properties seek flooring solutions that last longer and minimize the need for frequent replacement, allowing for a more sustainable and cost-effective approach,” she notes.

Still, the threat of product failure is enough to make some designers wary. “With hardwood, there is potential liability in terms of damage and the maintenance of the floor, so I don’t see a lot of usage in hospitality,” says Decker. “However, if you want to embrace rustic character as part of the look, then it’s really hard to mimic the real thing.”

Porcelain has long been the workhorse in hospitality spaces, such as in bathrooms and for high-traffic public space locations, but it also acts as a decorative aspect. “Ceramics can carry so much of the visual rhythm of storytelling in properties,” says Dalton. “We wrapped the La Bahia lobby bar in a hand-glazed teal green tile. The coloration is so rich and saturated. It acts as the jewelry.”

“Porcelain is one of my go-tos,” adds Von Lehe. “There are so many beautiful, wonderful products. Manufacturers have really upped their game with printing techniques.”

Dunn also appreciates the advancements in porcelain aesthetics, but notes, “What I struggle with most with porcelain is that everything I am seeing and loving on the internet or at shows is more residential, not commercially rated. We need more hand-crafted looks for hospitality that will hold up to high traffic. In addition, if companies promoted customization options, that would be useful.” 

In working on the Four Seasons residential project, Dunn came across one such custom option that she hadn’t known about previously. For the corresponding Four Seasons Orlando hotel, the Parker-Torres team designed a laser-cut design from wood-look porcelain, which Daltile executed and grouted onto panels to ease the jobsite installation process. 

The designer says, “With porcelain, I am often looking for something generic like a field tile, and companies all have the same looks. But sometimes for public areas, I’m looking for something more playful and creative. Who do I go to for the latest and greatest unique designs? Our normal go-tos might not have something you haven’t seen before. To find those pieces, we have to go to tile shows or Europe. Most often our reps don’t bring us both types of looks.”

Decker appreciates the way in which technology has enabled a porcelain look to be used both indoors and out. For instance, he may opt for an anti-slip paver for a deck and transition indoors with the same look. 

In lieu of the now ubiquitous 12”x24” porcelain, Talleux favors oversized square porcelain tiles or smaller, more distinctive formats that bring variety and visual interest to the space.

Even when broadloom is used in guest rooms, Dunn believes that bringing in a bit of hard surface can be helpful. “We often, at the minimum, bring hard surface flooring into the guest room entry way, and that makes all the difference-breaking up intersection of carpet to carpet. It feels fresher,” she notes.

SOFT STORY

Beautiful, luxurious broadloom and area rugs will always have a place in hospitality. After all, as far as first impressions goes, not much can outshine a rich soft surface floor that, through its design, tells a story about the property and what the guest will experience there. 

Whether spanning a room from wall to wall or acting as a warm welcome under a seating area, high-quality soft surface elevates, adding texture, tone and dynamism to a space. 

For this reason, and others, even as some hospitality spaces transition to hard surface, soft is often incorporated in the form of area rugs. 

“We do inset broadloom rugs in luxury guest rooms with porcelain surrounding,” says Dunn. “We use machine-tufted for suites and public areas. It’s always custom, designed from scratch.” In creating these custom pieces, Dunn works closely with the manufacturer. “I send the manufacturer our design narrative and as much information as possible. The more they have, the better, and I feel like it might strike the carpet designer with an idea.”

Dalton utilizes both inset and free-lay area rugs in guest rooms, depending on the building conditions. “We did a lot of inset rugs for a while, and there are opportunities and challenges with them both,” she notes. “I have seen a trend towards doing more inset in corridor spaces, which can be really beautiful.” She adds that carpet tile is only back of house.

Von Lehe believes that, after carpet tile stealing attention for a time, some designers are taking another look at broadloom. “I think people are seeing the benefits of broadloom again,” she notes. “The challenge for carpet tile is design. Even if the manufacturer creates something with a seamless look, the dirty secret is that the quality of installation is hard to control. If you even have a tiny bit of intolerance, you can see the seams, especially in a long corridor. In a smaller space where people are eating, for instance, or as an inset rug, that is a good spot for us to use carpet tile.”

Adds Talleux, “In hospitality, broadloom and carpet tile are used selectively based on the type and quality level of the property. Large-scale carpet tile is typically reserved for exhibition halls, while full-service custom hotels often use Axminster carpet in public areas for a plush, luxurious feel. Focused-service hotels tend to use carpet tile in targeted areas. Nylon is the material of choice for both broadloom and carpet tile, offering durability while maintaining the desired aesthetic and comfort.”

She continues, “When pairing rugs with hard surface flooring in hotels, we typically use Axminster or hand-tufted wool rugs, avoiding silk due to durability concerns. In guestrooms, Axminster may be used, but we often prefer flatter woven rugs for a more practical and long-lasting solution.” 

Related Topics:Daltile, The International Surface Event (TISE), RD Weis, Mohawk Industries, Shaw Industries Group, Inc., Carlisle Wide Plank Floors