U.S. Hotel Profits Rise in 2024 Despite Rising Costs and Inflation
- U.S. hotel industry profits saw growth in 2024, but the increase was constrained by rising labor costs and inflation.
- Miami showed the highest growth in Gross Operating Profit Per Available Room (GOPPAR) and Total Revenue Per Available Room (TRevPAR) among the top 25 markets.
According to data from CoStar, a leading provider of online real estate analytics, the U.S. hotel industry saw a growth in profits in 2024, albeit limited by increased labor costs and inflation. The per-available-room metrics reflect this trend, with GOPPAR increasing by 3.2% and TRevPAR by 7.2%, but labor costs surged by 11.2%.
Raquel Ortiz, senior manager of financial performance at STR, stated that the surge in total operating expenses, especially labor, had the most significant impact on profits. The growth in GOPPAR slowed towards the end of the year, falling below inflation rates. However, Ortiz noted that the rise in demand was instrumental in driving total revenues, providing a buffer against high expenses and allowing for modest profit increases.
Although increased group bookings helped boost Food & Beverage (F&B) revenues, it was not sufficient to offset the growth in labor costs that have affected profit margins.
Miami outperformed among the top 25 markets, showing the highest increase in GOPPAR and TRevPAR. Conversely, Oahu experienced the most significant drops in both metrics, likely due to decreased demand from labor strikes.
Categories: Trends