U.S. Hotel Costs Are Often Outpacing Revenue Growth

The DJIA fell 444 points on Friday while Nasdaq was down 269, the S&P 500 fell 58 points and the 10-year treasury yield was up .05 to 4.49%. The list of new highs in lodging stocks continued to grow, with HLT, MAR, WH, IHG, CHH and TNL all hitting new high-water marks on Friday.

Hotel properties struggled under rising costs that outpaced revenue growth in 2024, challenging economic growth and job creation. Despite these issues, potential lies ahead, driven by key trends in guest spending, shifting traveler behaviors, and upcoming major sports and entertainment events, according to the America Hotel & Lodging Association's 2025 State of the Industry Report produced in collaboration with Accenture. The report found that property-level costs overall rose faster than revenue and that specific expenses associated with operations and maintenance, sales and marketing, and IT each rose nearly 5% in 2024, further intensifying a challenging hotel operations environment. 

Other top findings from the report include: Hotels supporting employees: hotels are projected to pay employees a record of $128.47 billion in wages, salaries, and other compensation in 2025, up from $125.79 billion in 2024. Hotels are projected to add another 14,000 employees in 2025 and employ more than 2.17 million people. Hotels support communities: hotels are projected to generate a record of $55.46 billion in state and local tax revenue in 2025, up from $53.97 billion in 2024. The 2025 projection includes $26.82 billion in lodging-specific taxes. Hotels are also expected to generate a record of $30.14 billion in federal tax revenue in 2025, up from $29.55 bil