U.S. Hotel Profits Struggle in 2024 Amid Rising Costs

Laura Resco Director of Hotel Intelligence for the Americas discusses U.S. Hotel Profitability in 2024: A Year of Cost Challenges
Despite revenue growth, 2024 was a tough year for U.S. hotels, marking the only global market to see a decline in gross operating profit per available room (GOPPAR). The key culprit? Rising labor costs, which were higher than Asia Pacific, the second highest region.
While ultra-luxury hotels saw some profit conversion, most segments, especially midscale and economy, struggled with margin erosion. Corporate group travel rebounded, boosting conference and banqueting revenues, but overall profitability was squeezed by a heavier cost structure.
With rising management wages and utilities adding pressure, U.S. hoteliers are shifting focus to ancillary revenue streams like wellness, parking, and F&B efficiency to offset labor-driven profit challenges. As we move into 2025, strategies to optimize cost management and revenue diversification will be crucial.
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