GOP MARGIN
$ PAR
50 % 45 % 40 % 35 % 30 % 25 % 20 % 15 % 10 % 5 % 0 %
$ 10,000 $ 8,000 $ 6,000 $ 4,000 $ 2,000
$ 0
36 %
36 %
$ PAR( Per Available Room) / % of Total Revenue
$ 7,900 / $ 10,100 / $ 10,500 / $ 7,800 / $ 5,200 / $ 4,800 / 4.3 % 4.1 % 4.2 % 5.2 %
5.6 % 4.4 %
$ 8,300 / 4.5 %
+ 5.9 %
33 %
estate should be included in a property’ s assessed value for taxation purposes.( BEV is not taxable property in any U. S. state; BPP may or may not be taxable depending on the state.)
“ The end result is that hotels are typically overtaxed by about [ as much as ] 52 % since assessors do not limit the assessment to real estate,” O’ Connor said.
The consequence is that hotel owners are likely paying more property tax than they should because assessors are
GOP Margin
34 %
-0.0 % + 0.6 %
42 %
Property Taxes
$ 7,500 / 5.2 %
41 %
+ 4.5 % + 5.0 %
39 %
-1.0 %-1.6 %
$ 4,700 / 3.9 %
38 %
$ 4,300 / 4.8 %
+ 10.9 % + 10.6 %
PY $ PAR / % TTLREV CY $ PAR / % TTLREV % Chg YoY
45 %
+ 0.1 %
45 %
Total Portfolio Full-Service Select-Service Limited-Service Extended-Stay
PY CY % Chg YoY
taxing the value of the hotel business, not just the real estate. Unless owners challenge their assessments, the overvaluation may persist.
“ Hotel owners can appeal on their own and be successful. Part of the challenge is the nuance of differentiating between real estate, BEV and BPP. It is not clear to many hotel owners,” O’ Connor said.“ A hotel owner is much better appealing on their own versus doing nothing.”
In the Rooms department, full-service hotels saw the biggest leap in expense, up 4.2 % YOY on a per-occupied-room basis, which was around 1 % higher than the across-segments number. That cut mightily into a total YOY revenue increase of 2.5 %. Both select-service and extended-stay saw a decrease. Beyond labor, these costs would include cleaning supplies, contract services, decorations, linen and training.
Though full-service saw the highest increases in both Rooms and F & B expense— which makes sense since full-service hotels have a higher going-in cost basis than select-service and limitedservice hotels— they also had the biggest increase in revenue of all segment types.“ It’ s a little bit of a double-edged sword,” Finn said.“ They have the revenue to sometimes offset additional expense, but we also see that full-service hotels had the least cost discipline.” Conversely, according to Finn, hotels in the lower chain scales exhibited better cost-management tendencies.
Utilities proved to be another expense needle poking into the side of hoteliers. Utilities were up 7.4 % YOY on a PAR basis, with extended-stay seeing the highest rise at 10 %. The expectation is for utilities to be constant or higher due to variables including the war in Iran, which rocketed oil prices up after February and have yet to abate.
Despite the war and an interest-rate environment that remains elevated( and one that could even move higher), the
Ben Ketcham, AVP of asset management, LWHA
first quarter showed surprising revenue gains as RevPAR was up 3.8 % YOY, according to data, primarily driven by average daily rate.“ It’ s hard to know what that really means in terms of improved flow-through for full-service hotels, but if selectservice and limited-service are able to maintain cost discipline, they are best positioned to capitalize,” said Finn.
WORK IT OUT Total labor costs are not moderating across the board and will only move higher, especially as union contracts in many U. S. cities get renegotiated. Consider New York, where the hotel workers’ union was able to negotiate a new contract that will pay housekeepers more than $ 61 an hour by 2034. It will increase the average pay of housekeepers in New York City hotels to more than $ 100,000 a year.
“ Many owners and operators are facing similar challenges, but having a structured benchmark allows us to move beyond anecdotal observations and clearly identify where expenses are trending, how they compare and what actions may be needed,” said Ketcham.
July / August 2026 hotelsmag. com 55