The AHLA said hotels spent years preparing and have made "significant investments" based upon official projections.
A study commissioned by Fifa,, external released last year, predicted that in the US the World Cup could create 185,000 jobs, adding $17.2bn (£12.7bn) in gross domestic product.
The hotels were planning for an influx of international travellers, who book longer stays with a higher spend.
But the AHLA said fewer overseas fans "threatens the broader economic impact" with just over three weeks until the opening game on 11 June.
The AHLA said the large-scale bookings made by Fifa in all cities "shaped revenue forecasts, staffing plans and preparations".
It said this booking policy "manufactured artificial demand" and masked the fact that tourist flow is going to be lower than predicted.
Up to 70% of rooms reserved by Fifa in Boston, Dallas, Los Angeles, Philadelphia and Seattle have been cancelled, the AHLA said.
In a statement Fifa rejected the AHLA's claims and said it had followed agreements made with hotel chains.
"All room releases were conducted in line with contractually agreed timelines with hotel partners - a standard practice for an event of this scale," a Fifa spokesperson said.
"In many cases, room releases were made ahead of established deadlines to further accommodate requests from hotels.
"Throughout the planning process, Fifa's accommodations team maintained consistent discussions with hotel stakeholders, including room block adjustments, agreeing to rates, confirming room types and regular reporting, supported by townhall and ongoing communication."
Prices spiked after the draw was made, as soon as fans knew which cities their teams would be in.
There has been a gradual fall since then, reportedly by a further 20% in recent weeks.
But this could be too late to entice fans back.
Hotel prices in cities like Boston are still more than $300 (£224) a night, and most fans are working to a lower budget.
Chris Hancock, an England fan who has been to four World Cups, told BBC Sport that his group of five are travelling on an accommodation budget of $75 (£56) per person per night.
They will hire a car in each city and book a mix of hotels and Airbnb accommodation between 45 minutes to an hour away.
"We always tend to stay out of town a little bit and cut the cost that way, so we're not in the middle of Dallas, Boston or New York," Hancock said.
"If you're out of the city centres where everything's happening, you can get some cheaper deals.
"We're working within that budget. And at the minute we should be well under that."
The AHLA told BBC Sport it "expects occupancy to strengthen in June and July".
"We know that many fans are still waiting on tickets and schedules to become clearer before finalising plans," a spokesperson said.
"We believe bookings will pick up in the weeks ahead. Hotels are ready to welcome guests and ensure that they have the best possible experience."
Airbnb says the World Cup is on course to be the "biggest hosting event in Airbnb's history", overtaking the 2024 Olympic and Paralympic Games in Paris.
Hotels might need to rely on making gains in the knockout rounds, when fans have to make bookings at short notice.
But the World Cup seems unlikely to bring in the revenue that was being predicted.
