Hotel Managers Reported Rising Profit Margin Pressures
Asset managers are navigating increased labor and insurance costs despite optimistic revenue projections for 2027.
Updated on Oct. 12, 2026 in Hospitality
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The Hospitality Asset Managers Association reported in fall 2026 that while most members expect to exceed full-year revenue targets, a majority are struggling with profit margin compression. These pressures are largely driven by rising labor expenses and insurance costs.
Why it matters
Hotel brands operate as fee businesses, but owners focusing on bottom-line profits face a divergence as rising operating expenses continue to erode net income. This tension forces operators to balance aggressive revenue growth against high wage and insurance burdens.
While 57% of asset managers expect to exceed RevPAR budgets, only 51% anticipate meeting gross operating profit projections. Concerns regarding wage growth rose to 44% of members, up from 33% in 2025.
The players
Hospitality Asset Managers Association
An industry organization representing professionals tasked with maximizing the financial performance and value of hotel properties.
CoStar
A provider of commercial real estate data and analytics that tracks industry benchmarks including RevPAR growth projections.
The details
Hotel asset managers are managing the gap between top-line revenue and net profit by exerting tighter control over food and beverage expenditures. To mitigate rising costs, properties are leveraging brand-provided fee reductions, which are contingent upon achieving high guest service scores. Despite this, external factors like labor availability and insurance expenses remain outside direct operational control, limiting margin expansion.
Timeline
2025: Wage growth was a top concern for 33% of members.
Spring 2026: 58% confidence in revenue and 55% in profits was recorded.
October 9, 2026: HAMA board members held a call.
Fall 2026: The Hospitality Asset Managers Association conducted its latest survey.
2027: Industry experts project a 2.1% increase in RevPAR.
Market Landscape
This development reflects the persistent tension between hotel brand fee models and owner profitability as operating costs escalate. The findings confirm a multi-year trend where revenue performance frequently outperforms the bottom line due to unavoidable wage and insurance inflation.
Operators should prioritize guest service score benchmarks to capture available fee reductions that can offset rising labor costs. Review insurance premiums and wage structures immediately to determine if operational savings in food and beverage are sufficient to maintain margin targets.
The takeaway
Revenue growth is no longer a reliable proxy for profitability as labor and insurance costs continue to climb. Operators should audit their current vendor contracts and service scores to ensure they are capturing every available brand-level financial incentive.
Further reading
For more information on current industry performance trends, visit the Hospitality section.
Source note: This article includes information reported by CoStar.
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