U.S. hotels are spending more to operate while taking in less revenue, a squeeze that is expected to drag down profits for at least another year.
A mix of wage increases, tax hikes, and insurance premium run-ups outpaced the sector’s ability to raise room rates.
Labor costs alone have soared 9% this year on a per-available-room basis, according to CoStar’s survey of about 6,000 hotels.
Hotels took in 0.4% less revenue per available room in 2025 than a year earlier, according to an estimate from CoStar and Tourism Economics.
“Luxury class hotels were the only ones getting close to increasing average daily rate to the level of inflation,” said Jan Freitag, national director, hospitality analytics at CoStar Group. “All other classes saw flat average daily rate growth or even a contraction.”
This year’s U.S. hotel EBITDA is forecast to decline 2.8%, according to Lodging Analytics Research & Consulting (LARC).
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