San Diego Hospitality Market Report

Historic year for room additions heightens competition among hotels. Last year, compared with other major U.S. markets, occupancy in San Diego ranked the third highest, with rates across all property classes and submarkets exceeding 70 percent. In 2025, the local hotel sector faces some challenges. The metro’s proximity to the U.S.-Mexico border makes it acutely susceptible to immigration policies that could disrupt its hotel workforce and impact labor costs. Geopolitical issues, meanwhile, may impact international travel into the metro. These potential hurdles are materializing during a period of heightened construction activity, most notably with the 1,600-key Gaylord Pacific Resort & Convention Center in Chula Vista opening this year. With a room count that equates to 2.4 percent of the metro’s entire room inventory, the property’s delivery will have an immediate impact on the metro’s overall occupancy rate. Fortunately, hotel completions are relatively scant in San Diego proper. The only other property slated for addition that stands out — a 200-key hotel at Jamul Casino — is located in a rural area of the metro.