- HotelData.com: U.S. hotels lower demand, wider performance gap.
- Full-year profit share rose as operators controlled costs and operations.
- Ancillary revenue fell, with TrevPAR down 8.8 percent YOY to $151.34.
U.S. HOTELS CLOSED 2025 with lower demand, declining RevPAR and a widening performance gap across chain scales and regions, according to HotelData.com. However, full-year profit share rose as operators managed costs and operations closely.
HotelData’s “Q4 2025 Hotel Profitability Performance Report” found ADR fell 0.9 percent quarter over quarter to $179.96, while RevPAR dropped 9.6 percent to $111.87, as occupancy and demand, not pricing, drove the slowdown. GOP margin fell 3.3 points to 36 percent, reflecting slower demand and costs that lagged revenue.
“The fourth quarter confirmed that the industry has moved into a different phase,” said Sarah McCay Tams, Actabl’s head of research. “Hotels largely held rate, but demand became more selective and revenue slowed. We’re also seeing the industry split in two. Hotels serving affluent travelers are in a fundamentally different business right now than those competing on price. What separates performance now isn’t broad market momentum; it’s operational precision. In 2026, the hotels that will win will be those that forecast tighter, flex faster and manage costs with real-time discipline.”
Despite late-year softness, full-year 2025 shows ADR down 2.5 percent and RevPAR down 6.3 percent versus 2024. The GOP margin rose 1.1 points to 38.3 percent, supported by labor discipline, cost control, and controlled expense ramping.
The data also highlighted a widening performance gap across chain scales and regions. Luxury and upper-upscale hotels maintained higher rates and ancillary revenue, while economy and midscale properties saw larger RevPAR declines, reflecting a K-shaped pattern in which higher-income consumers continue spending and budget-sensitive travelers cut back.
Revenue outpaced rate decline
ADR fell 0.9 percent, while RevPAR dropped nearly 10 percent, showing occupancy and demand mix, not pricing, drove performance pressure, the report said. The gap between rate stability and revenue decline underscores how quickly demand sensitivity can erode topline results. GOP margin fell 3.3 points as variable costs lagged revenue, highlighting the need for cost models linked to demand.
Profit share improved in 2025 despite lower revenue. Compared with 2024, ADR fell 2.5 percent and RevPAR dropped 6.3 percent, while GOP margin rose 1.1 points. Operators maintained margins through labor deployment, purchasing discipline and controlled expense ramping.
Ancillary revenue declined, with TrevPAR down 8.8 percent year over year, from $165.95 to $151.34. Consumers reduced discretionary spend, while luxury and upper-upscale hotels maintained add-on revenue. Economy and midscale properties saw more trade-down behavior, reflecting the same divide across chain scales.
Budget assumptions exceeded demand in 2025. Full-year ADR fell 3.8 percent and RevPAR dropped 5 percent versus budget, while GOP margin declined 0.8 points. The largest gaps occurred in July and August, but operators narrowed the gap in the fourth quarter by recalibrating forecasts and tightening cost controls.
Segment, regional gaps grow
Performance gaps widened across segments and regions, HotelData said. Upper-midscale hotels exceeded budgeted margins, while independents saw the largest margin compression and economy properties had the biggest revenue shortfalls. RevPAR strength was concentrated in the Northeast and parts of the West, while the Midwest and South trailed national medians. Tourism-driven states, including Hawaii, New York, Nevada and California, delivered more consistent profit per available room.
The fourth quarter was not just a seasonal slowdown; it signaled a shift in how profitability is achieved in a demand-sensitive environment. Inflation has eased, but affordability is limited, interest rates remain high and demand is fragmenting. Hotels can no longer plan around average demand.
The 2026 environment points to moderate growth, with ADR outweighing occupancy in many markets. Performance will depend less on market lift and more on operational precision. Key priorities for 2026 include planning around occupancy rather than rate, segmenting demand by spending power and price sensitivity, linking labor and variable costs to RevPAR in real time, reassessing ancillary revenue assumptions and developing separate strategies for luxury and economy segments.
A recent U.S. hotel forecast from CoStar and Tourism Economics projects RevPAR will rise 1.7 percent in June and July during the World Cup, contributing to overall industry growth.
