Hotels & Motels NAICS 721110

May 15, 2025 - RevPAR Hits a Record High in Q1

• Revenue per available room (RevPAR) in the hotel industry grew 2.2% year over year in Q1 2025 to a record $92, per JLL’s US Hotel Trends Investment Report, despite growing headwinds in the overall travel industry. Strong annual daily room rates drove the RevPAR boost, while hotels in urban areas performed particularly well on strong group and corporate travel during the quarter. Select-service and extended stay hotels were the strongest performers for investors by hotel type, with a 23% Q1 year over year boost in hotel transaction volume. These niche hotels have less overhead costs due to streamlined amenities and less labor. The report also noted a 5.7% RevPAR drop in economy hotels, a growing industry trend away from low-budget lodging in favor of more upscale hotels. JLL expects market softening in inbound international travel as foreigners grow wary of US travel due to Trump immigration policies.
• The Federal Trade Commission’s (FTC) new rule on Unfair or Deceptive Fees was well received by the hotel industry as it creates consistency in hotel pricing policies. The rule, which went into effect in May 2025, deems it an unfair and deceptive practice to, “offer, display, or advertise any price of live-event tickets or short-term lodging without clearly, conspicuously, and prominently disclosing the total price.” For the hotel industry, the rule means it must display upfront any added costs to the price of a room, such as resort or destination fees. The rule is a victory for consumers as well as companies. The FTC didn’t ban the fees, but just forces companies to be transparent about the full cost of hotel rooms at the outset of a reservation. Industry advocates say a federal industry standard was needed to combat inconsistent state rules on “junk fees.”

• Hotel stocks have been battered in April following the announcement of broad-based US tariffs, with the Dow Jones Hotel Index falling 6% the day after the tax levies were announced on April 2, 2025. Combine that with sinking international travel bookings to the US and the travel industry is sounding the alarm. Axios found that travelers passing through customs at the country’s 10 biggest airports have fallen 20% by late March. Fewer travelers mean fewer stays in the country’s hotels. Hotels benefit big from international travel and major cities throughout the US will likely be hammered by depressed travel from Asia, Europe, and Canada. The hotel industry was already dealing with a labor shortage and has increased wages to compensate. If operational expenses keep rising (hotels buy lots of things like towels that are never sold to guests), revenue per available room will eventually take a bit hit.
• Employment in the hotel industry grew 1.7% year over year in December, per the US Bureau of Labor Statistics, but that still remains below pre-pandemic levels amidst an ongoing industry-wide staff shortage. The hotel industry lost about 680,000 jobs during the pandemic, and in the four years since has added back 467,000 employees (68%), according to data analysis from The American Hotel and Lodging Association (AHLA). Retention of the industry’s 2.1 million workers will be a key focus for hoteliers in 2025, according to AHLA, with employers stressing an increase in total wages, compensation, and advancement opportunities. A survey of hotel owners by AHLA in December 2024 found that 64% currently have staffing shortages. The top employer methods cited to reverse the trend included pay raises (47%), flexible work schedules (19%), and offering employees steep hotel discounts (13%).