HotelData.com Q4 2025 Report Shows Demand Slowdown, Wider Segment Divide

The Q4 2025 Hotel Profitability Performance Report shows that U.S. hotels experienced a notable slowdown in demand and revenue, with a widening gap in performance between luxury and economy segments, but managed to improve profit margins through tighter operational controls.

The Q4 2025 Hotel Profitability Performance Report, released by HotelData.com, indicates that U.S. hotels ended the year with softer demand and declining revenue per available room (RevPAR). The report, based on data from thousands of hotels using Actabl’s platforms, highlights a 0.9% drop in average daily rate (ADR) to $179.96 and a 9.6% decline in RevPAR to $111.87 for the quarter. The primary driver of the revenue decrease was reduced occupancy and demand, rather than pricing changes. Gross operating profit (GOP) margin fell by 3.3 percentage points to 36%, reflecting the challenge of adjusting costs quickly enough to match falling revenue.

Full-Year Trends and Profitability

Despite the late-year softness, the full-year 2025 data present a more nuanced picture. Compared to 2024, ADR decreased by 2.5% and RevPAR by 6.3%. However, the GOP margin increased by 1.1 percentage points to 38.3%. This improvement is attributed to disciplined labor management, stricter cost controls, and cautious expense increases. Operators were able to protect profit margins even as top-line revenue declined, showing a shift toward operational efficiency in response to market pressures.

Segment and Regional Performance Gaps

The report identifies a widening performance gap between different hotel segments and regions. Luxury and Upper Upscale hotels maintained stronger rates and ancillary revenue, while Economy and Midscale properties experienced greater pressure on RevPAR. This trend reflects a K-shaped economic environment, with higher-income travelers continuing to spend while budget-sensitive guests reduce travel or seek lower-cost options. Regionally, RevPAR strength was concentrated in the Northeast and parts of the West, with tourism-driven states like Hawaii, New York, Nevada, and California showing more consistent RevPAR. In contrast, the Midwest and South lagged behind national averages.

Ancillary Revenue and Budget Variances

Ancillary revenue became less reliable in 2025, with total revenue per available room (TrevPAR) declining 8.8% year over year, from $165.95 to $151.34. Consumers showed greater value sensitivity, leading to reduced discretionary spending. Luxury and Upper Upscale hotels sustained stronger ancillary revenue, while Economy and Midscale segments experienced more pronounced declines. Additionally, actual performance for the year lagged behind budget projections, with ADR 3.8% below expectations and RevPAR 5% lower. The gap between forecast and reality was widest in July and August but narrowed in Q4 as operators adjusted forecasts and tightened cost controls.

Outlook for 2026: Operational Focus

The report suggests that the Q4 slowdown marks a structural shift in the industry rather than a seasonal change. With inflation easing but affordability still an issue, and interest rates remaining high, demand is expected to remain fragmented. The 2026 outlook points to modest growth, with ADR likely to play a larger role than occupancy in driving performance. Success will depend on operational precision, including linking labor and variable costs to real-time demand, segmenting guests by spending power, and reassessing ancillary revenue strategies. The report recommends developing separate approaches for the luxury and economy segments to address the diverging market conditions.

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