At first glance, the hotel industry in the United States seems to be climbing back. Total revenue per available room (TRevPAR), gross operating profit per available room (GOPPAR), and payroll per available room (PayPAR) have all posted year-over-year gains. But peel back the layers, adjust for inflation, and a different picture emerges—one where progress is slower, margins thinner, and true recovery still out of reach.
The latest HotStats data from April 2025 underscores a recurring truth in post-pandemic hospitality: nominal growth does not equal real recovery. Despite steady increases over the last few years, many U.S. hotels are still making less money in real terms than they did in 2019. When compared against the Consumer Price Index (CPI), which continues to trend upward, it becomes clear that inflation has silently eroded much of the apparent progress.
This is not just a statistical quirk. It’s a margin story. While revenue growth has been stubbornly slow to catch up to inflation, labor costs have charged ahead. Over the past year, payroll increases have outpaced revenue, putting immense pressure on operating profits. For hotels already operating on tight margins, this dynamic spells trouble. The result is a profitability landscape that may look stable at the surface, but underneath, is stretched thinner than it’s been in years.
Margins are getting squeezed on both ends. You can’t raise rates fast enough to outpace inflation. The inflation gap isn’t just academic—it’s something hoteliers feel every day on the P&L. Laura Resco, Director for Hospitality Intelligence in the Americas
That inflation gap is especially clear when comparing April 2025 to April 2019. Even as hotels report higher average daily rates and nominal revenues, GOPPAR has not kept pace with the increased cost base. What was once a resilient, if bruised, operating model is now being fundamentally tested.
Compounding the issue are the upcoming union negotiations in major U.S. cities—most notably in New York, Los Angeles, and Chicago. Any resulting wage increases will likely tip labor costs even higher, worsening the imbalance between top-line and bottom-line performance. In many cases, owners and operators are already struggling to manage service levels while keeping costs in check.
Beyond labor and inflation, another headwind looms: the geopolitical landscape. If tariffs return or trade policies change direction, inflationary pressure could intensify. The prospect of another wave of cost increases—this time imported—raises the stakes for hoteliers trying to balance long-term planning with immediate survival.
While some U.S. markets are showing stronger results than others, the uncertainty about what comes next is felt across the board. The pace of real recovery has slowed, and operators have limited levers to pull. Rate increases can only absorb so much of the cost pressure, and productivity improvements—especially in labor-heavy areas like housekeeping and F&B—remain difficult to scale.
This doesn’t mean the outlook is hopeless. Rather, it calls for sharper intelligence, more precise forecasting, and a reassessment of what profitability really means in 2025. Nominal gains are no longer sufficient; owners and asset managers need to examine performance through a lens adjusted for inflation, wage growth, and evolving guest expectations.
It’s not just about getting back to 2019—it’s about building a new baseline.
That new baseline demands smarter benchmarking, more flexible staffing models, and tighter coordination between revenue and operational teams. It also requires a sobering acknowledgment that “normal” might never look the same again—and that could be a good thing. In a market this dynamic, those who adapt fastest to reality, not just history, will have the edge.
If you want to explore how HotStats can help you gain clarity on true profitability performance, visit www.hotstats.com.
