Navigating Uncertainty: Profit Matters in the US Hotel Market

25 April, 2025 1 category

If there’s one word that defines the current U.S. hotel landscape, it’s uncertainty. As we move into 2025, hoteliers across the country are facing a slew of critical questions: How resilient is demand? Are rising costs here to stay? And most importantly—how can we maintain profitability in a market that feels, well, unpredictable?

At HotStats, we believe that in volatile times, data isn’t just helpful—it’s essential. That’s why we’re diving into insights from our Profit Matters annual review, alongside early 2025 performance trends. Here’s what we’re seeing—and what you should be watching.

Revenue Is Up—But Where’s the Profit?

2024 brought modest top-line growth for U.S. hotels. Occupancy ticked upward, and guests spent more. But while revenue increased, profitability didn’t follow suit. In fact, it declined.

All key departmental margins fell year-on-year, and Gross Operating Profit per Available Room (GOPPAR) also dropped. The primary culprit? Costs—especially labor.

Labor Costs: The Flow-Through Disruptor

In 2024, for every $1 increase in top-line revenue, U.S. hotels faced a $1.04 increase in total costs. Of that, $0.75 came from incremental labor expenses. The math doesn’t lie—rising staffing costs are eating into margins, leaving little room for error and even less for growth.

Fighting Margin Erosion: The New Operational Normal

It’s no longer just about generating more revenue—it’s about generating it profitably. Over the past 14 months, margin contraction has become the norm, with only two months showing positive year-on-year growth.

Revenue growth alone is no longer sufficient. Hoteliers must turn their attention inward—optimizing operations, controlling costs, and rethinking efficiency strategies—to protect what really matters: profitability.

All Segments Are Feeling the Pressure

Not all hotels are following the same revenue path.

Luxury and upper-upscale segments have benefitted from resilient demand, the return of group travel, and a growing appetite for high-end experiences.

Meanwhile, midscale and economy properties are feeling the strain, as inflation-weary travelers tighten their spending.

Despite these divergent trends at the top line, profit margins are under pressure across the board. Whether you operate a five-star icon or a roadside inn, cost control and strategic planning are now non-negotiable.

Benchmarking: Your GPS in the Fog

When the future is unclear, benchmarking becomes your most powerful navigation tool.

It’s not just about comparing numbers—it’s about understanding how top performers are adapting, evolving, and succeeding. Operational benchmarking provides clarity in complexity by helping you:

Spot areas of underperformance and overperformance
Analyze across all revenue streams—not just rooms
Plan for profit, not just revenue
Build stronger business cases backed by data

The old mindset of “grow revenue and profits will follow” no longer holds. Today, you must plan for profit—and benchmarking is the most effective way to do it.

Your Roadmap to Success

In a market defined by uncertainty, operational benchmarking is your roadmap. At HotStats, we equip hoteliers with the P&L insights they need to succeed—whether that means adjusting staffing levels, realigning service offerings, or making smarter budget calls.

Let’s make sure your hotel isn’t just surviving but thriving.