Beyond the Peak Season: Navigating New Realities in Maine Hospitality

By Roy Donnelly | Associate Broker

Hospitality and tourism are cornerstones of Maine’s economy, contributing over $9 billion to the state’s total economic output and providing roughly one in every six jobs in the state. This impact is felt up and down the coast and well into inland parts of the state; striking geography, waterfront, and comfortable summer weather all draw disposable income to Maine and contribute significantly to the state’s tax base.

Post-COVID, Maine’s hotel and lodging establishments, reported strong rebounds. Rates and occupancy jumped statewide with the resurgence of leisure travel in 2021 and 2022. Lodging tax receipts, as a proxy for hospitality sales, nearly doubled from the lows of 2020, far outpacing the swing seen in aggregate sales tax receipts in the state. In fact, for much of the past twenty years, growth in lodging has outpaced growth in other forms of sales tax collected by the state of Maine.

However, both the growth in lodging tax receipts and its relative position among other forms of sales tax collected have slipped since 2023. Spending on hotel rooms is more discretionary than other forms of consumption. The inflation coming out of COVID’s recovery has proved to be sticky and the pressure on consumers has trickled down into Maine’s hospitality market.

The larger story is how different markets are faring in this re-balancing. Unsurprisingly, Bar Harbor, Portland, and the state’s southern beach towns continue to lead the way in volume.

More interesting is the re-shuffling of the state’s fastest- growing hospitality markets. Acadia National Park, which has become more nationally popular post-COVID, continues to outperform and draw crowds. South Portland’s rise is less obvious, but Portland, as the state’s other darling market post-COVID, is likely drawing enough attention to increase rates and occupancy by the interstate-serviced and slightly more affordable South Portland and Maine Mall areas.

Consistent with the narrative inflationary pressure felt by consumers, it also appears that markets with a greater share of “luxury” rooms have outperformed markets with more mid-scale or economy rooms. In southern Maine, Kennebunkport, York, and Ogunquit have continued to see growth where Old Orchard Beach and Wells have slipped. Central Maine markets like Augusta and Waterville are benefitting from stable anchors of state government and higher education, while Bangor and Lewiston may be feeling the pinch with reduced international travel and less “spillover” from Acadia and Portland, respectively.

While Maine continues to draw attention and hospitality dollars, there is a gap emerging across individual markets – tracking this re-balancing over time will become increasingly important for owners and investors looking to stay ahead
of changing consumer preferences.

2025 Transactions and New Construction Overview

Regardless of shifting individual market growth and consumer preferences, transactions are still largely driven by a particular property’s position in its ownership cycle. Owners looking to retire, rebalance portfolios, or avoid the headache of major renovation underpin most of the state’s largest hospitality sales to date in 2025.

New construction and delivery of renovated hotel rooms has slowed from recent highs post-COVID, with new product focused on extended stay and boutique luxury properties.

Maine’s natural beauty and proximity to northeast population centers will continue to support the hospitality and tourism industry in the state. However, changing preferences, outsized performance in the luxury segment, and inflationary pressures felt by consumers and operators may widen divides that are starting to emerge.