Travel & Leisure May 2025 Update

The Big Story

The U.S. hotel industry faces mounting financial pressures as operating costs continue to rise faster than
revenue growth. According to CBRE¹ and the American Hotel & Lodging Association (AHLA)², insurance premiums have surged by over 15%, with economy and midscale properties seeing even sharper increases. Simultaneously, utilities, property maintenance, and labor expenses have escalated, forcing hoteliers to reconsider pricing strategies and implement tighter cost controls to protect margins in a persistently inflationary environment.

These pressures are compounded by ongoing labor shortages and high wage demands, which strain operations across many hotel segments. Reports suggest that while demand fundamentals are stabilizing, particularly in urban markets, the cost side of the equation remains volatile. Due to construction and financing challenges, margin erosion remains a concern, especially for independent operators and