Hotels selling rooms, not profits

Hotels are still filling rooms and raising rates, but more of that revenue is getting eaten by labor, insurance, utilities and other costs before it reaches profit. (hotelnewsresource.com) Hotel News Resource reported on April 17 that occupancy and average daily rate have stayed relatively stable in many markets, while labor costs in some markets are more than 20% above pre-pandemic levels. The piece said investors and asset managers are now focusing less on topline revenue and more on how much of it converts into margin. (hotelnewsresource.com) That pressure is showing up even as big hotel names keep winning in the market. Marriott shares traded as high as $367.50 on April 16 after hitting $370.00 intraday on February 12, and Host Hotels & Resorts recently touched a 52-week high around $21.00. (finance.yahoo.com, finance.yahoo.com) Marriott’s own outlook points to slower room-revenue growth than the industry saw in the rebound years. In its February 10 results, the company said full-year 2026 worldwide revenue per available room is expected to rise 1.5% to 2.5%, even as it forecast adjusted earnings before interest, taxes, depreciation and amortization growth of 8% to 10%. (marriott.gcs-web.com) Host Hotels gave a similar read on February 18: full-year 2025 comparable hotel revenue per available room rose 3.8%, and comparable hotel total revenue per available room rose 4.2%, while its 2026 guidance called for 2.5% to 4.0% total revenue per available room growth. Host also said it sold two assets in 2025 and had four more sold or under contract in early 2026. (hosthotels.com) The industry has been warning for months that demand alone is no longer enough to protect margins. The American Hotel & Lodging Association said in its 2025 state-of-the-industry report that hotels were dealing with rising operating costs and regulatory pressure even as travel demand normalized. (ahla.com) HVS, a hotel consulting firm, said in December that gross operating profit margins were declining broadly across property types because labor, operating standards and shared-service costs were rising while average daily rate growth was flattening. Its report said occupancy dipped in 2025 and average daily rate increases were moderating after the post-pandemic surge. (hvs.com) That leaves a split screen for hotel investors in April 2026. Public markets are still rewarding companies with scale, fee income and asset sales, while owners and operators are spending more energy on staffing, budgeting and cost control to keep each occupied room profitable. (marriott.gcs-web.com, hosthotels.com, hotelnewsresource.com)