May inflation rose to 4.2% with California gas passing $6, hitting consumer confidence; however, the labor market stayed resilient, adding 172,000 jobs with a steady 4.3% unemployment rate.
Domestic travel sentiment weakened in May over recession and spending worries, threatening to disrupt otherwise positive first-half hospitality performance in the remaining half of the year.
State hotel growth slowed in May due to flat demand and fewer group bookings, though ADR and RevPAR still managed over a 3% increase.
Ongoing Middle East conflict cut California's priority market airlift by 10%, pulling May visitor arrivals down 8% despite a minor month-over-month improvement from April.
Source: Visit California and third-party data sets