US hotels focus on margins in first half of 2023

Hotels saw general pressure on profit margins in the first half of 2023, with GOP margin falling by 1% point compared to the same period in 2022

A closer look at brand-scale performance reveals that the extremes were particularly affected: both the luxury and midscale and economy segments exhibited the greatest year-on-year margin declines, according to the latest HotStats data.

Key takeaways

• A major factor influencing this trend is the increase in labor costs, as the need to offer more attractive wages and benefits to compete with other industries for talent resulted in a significant expansion in this expense category;
• The extremes of the brand scale again bore the brunt of this disparity: the luxury segment saw labor costs per available room outpace TRevPAR growth by 5.3 percentage points, while midscale and economy properties had a 6.6 percentage-point gap;
• The fact that hotel total revenue continues to grow is positive. However, it is important to keep in mind that revenue is not a synonym for profitability. As volume expands and the recovery of the different guest segments progresses, cost controls become ever more important to protect flow-through and optimize profit conversion.

Get the full report at HotStats