Metric
Initial 2025 Projection( Jan 25)
• Macroeconomic volatility— rising interest rates, tariffs and persistent inflation.
• Demand unpredictability— shortened booking windows, with transient bookings dipping below four days.
• Policy disruptions— government shutdowns, geopolitical tensions and reduced federal travel.
HVS data confirm that GOP margins declined across all property types in 2025, with unionized hotels experiencing the sharpest erosion due to rigid staffing rules and contractual wage escalations.
What can owners do now to mitigate margin erosion?
Six high-impact cost-containment initiatives for owners to improve margins:
➊ Redesign Labor Productivity Models Owners should challenge legacy staffing assumptions and brand standards. Key actions include:
• Cross training and combining roles( e. g., concierge / front desk / bell).
Actual 2025( Year End)
Occupancy 63.1 % to 63.4 % ~ 62.3 % ADR Growth + 1.6 % to + 2.1 % + 0.8 %
RePAR Growth + 1.8 % to + 25 %
GOP Margin
-38.9 %( Projected-12 pts vs 24)
EBITDA Margin ~ 25.7 %
-0.4 % Y / Y( first decline since 2020)
~ 37.7 %( 1-25 to-23 pts vs 24)
~ 24.7 %( 100 bps lower than 24)
Labor Cost( CPOR) Moderate Increase + 2 % to + 11.2 % YN
Source: Revenue from CoStar and Margins from HotelData. com
US Hotel COP Margins( by Property Type)
2024 2025 Decrease(% Pts)
All Hotels 40.1 % 39.5 %-0.6 % Full Service 31.2 % 30.7 %-0.5 % Select Service 47.2 % 46.6 %-0.6 % Extended Stay 42.0 % 41.3 %-0.7 %
Source: HVS database of US Hotel Gross Operating Profit Margins, December 22, 2025
• Reducing supervisory layers.
• Implementing housekeeping self-check models.
• Integrating labor forecasting with booking pace through rolling forecasts.
• Investing in selective automation( kiosks, robotics, predictive maintenance). KPIs: Labor cost %, minutes per room, overtime hours.
➋ Strategic Procurement & Centralized
Purchasing
• Consolidate vendors across the portfolio.
• Use reverse auctions for high-spend categories.
• Standardize specifications and implement min-max inventory controls.
• Consider GPO participation. KPIs: CPOR reduction, shrinkage / spoilage rates.
➌ Energy & Utility Optimization
Start with an energy audit, then implement:
• EMS platforms
• LED retrofits
• HVAC zoning
• Load shifting and demand response
• Solar + storage where feasible KPIs: kWh per occupied room, utility cost per available room.
➍ Tech Stack Rationalization
• Eliminate redundant SaaS tools.
• Negotiate enterprise licenses.
• Integrate PMS, POS, RMS, CRS, and HRIS to reduce manual work.
• Use RPA for invoicing and reconciliations. KPIs: SaaS spend per property, back-office FTE hours saved.
➎ Reengineer F & B for Margin
• Simplify menus.
• Focus on high-margin items.
• Standardize purchasing.
• Enforce portion controls.
• Reduce waste and consider third-party partnerships for transient demand. KPIs: Food cost %, average check, plate contribution margin.
➏ Portfolio-Level Shared Services
• Audit centralized services charged by management companies.
• Validate allocation methodologies.
• Identify opportunities for shared services to reduce property level FTEs. KPIs: FTEs per property, central OPEX savings.
MARGIN MANAGEMENT IS THE NEW OPERATING MANDATE The GOP squeeze of 2025 was not a temporary anomaly: it marked a structural reset in hotel operating economics. As the industry moves through 2026, ADR alone will not restore margins. Owners who actively manage labor productivity, challenge fixed cost creep and align operators around NOI outcomes will be best positioned to protect and enhance asset value.
Short-term cost containment must be paired with medium-term strategic investment to preserve guest experience, brand value, and long-term competitiveness.
Mar / Apr 2026 hotelsmag. com 37