Laura Resco discusses U.S. Hotel Profitability in 2024:
A Year of Cost Challenges
Despite revenue growth, 2024 was a tough year for U.S. hotels, making it the only global market to see a decline in gross operating profit per available room (GOPPAR). The key culprit? Rising labor costs, which increased at a faster pace than revenue for all months of 2024.
All segments struggled with margin erosion, though midscale and economy showed the greatest resilience by achieving a positive flex in the face of a top-line contraction. Corporate group travel rebounded, boosting conference and banqueting revenues, but overall profitability was squeezed by a heavier cost structure.
With rising operated and undistributed costs, U.S. hoteliers are shifting focus to ancillary revenue streams like wellness, parking, and F&B efficiency to offset labor-driven profit challenges. As we move into 2025, strategies to optimize cost management and revenue diversification will be crucial.
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