Hotels & Motels NAICS 721110

Oct 29, 2025 - Hotel Industry Losing Money on Government Shutdown

• The US hotel industry is being significantly affected by the government shutdown, with the American Hotel & Lodging Association estimating $650 million in lost revenue so far, equating to roughly $31 million per day in economic activity tied to hotel stays. Hotels alone directly employ about 2.1 million people, and the broader hospitality sector supports roughly 9.2 million jobs, meaning nearly one in every 25 workers relies on the industry. The shutdown has led to cancellations and delayed bookings from both business and leisure travelers, particularly during the critical holiday travel period. Occupancy rates in markets near federal offices have fallen sharply, and smaller independent properties report financial strain. Industry leaders warn that prolonged shutdowns could create ripple effects across tourism, dining, and local economies that depend on visitor spending. The uncertainty is also affecting hiring and operational decisions, leaving hotels to balance payroll obligations with declining revenue streams while maintaining service standards.
• US hotels are increasingly focusing on balancing online travel agency (OTA) partnerships with direct bookings to enhance profitability and guest loyalty. While OTAs like Booking.com offer hotels global reach and drive volume, they come with high commission fees and limited access to guest data. To mitigate these challenges, hotels are employing strategies such as offering value-added incentives like free breakfast or late checkout to encourage direct bookings. Additionally, optimizing hotel websites for mobile devices and ensuring a seamless booking experience can reduce "leakage," where potential direct bookers end up on an OTA. Implementing smart pricing strategies allows hotels to maintain competitive edge without breaching OTA agreements. Collecting guest data during the booking process, even from OTA reservations, enables hotels to personalize services and foster repeat business.

• Hotels are increasingly adopting biometric access systems, such as fingerprint or facial recognition, to enhance security and streamline guest experiences. These systems offer a contactless, keyless entry, reducing the need for physical key cards and minimizing the risk of unauthorized access. They also facilitate smoother check-in processes, allowing guests to bypass the front desk and proceed directly to their rooms. For hotel operators, biometric systems can improve operational efficiency by reducing key-related issues and enhancing guest satisfaction. However, implementing such technology requires careful consideration of privacy concerns, data security, and compliance with regulations. As the hospitality industry continues to evolve, the integration of biometric access systems represents a significant step toward modernizing hotel operations and meeting the expectations of more tech-savvy travelers.
• The hotel industry is grappling with a challenging balance between revenue growth and escalating costs, according to hotel benchmarking company HotStats. While revenue per available room continues to rise, labor expenses are outpacing these gains, leading to smaller profit margins. Hotels that achieved at least a 5% year-over-year total revenue per available room growth (guest spending on everything, not just the room) managed to maintain profitability, whereas those with lower growth experienced declines in gross operating profit per available room. Luxury and ultra-luxury properties are better positioned, leveraging diversified revenue streams such as food and beverage and ancillary services to offset rising costs. Additionally, expenses in areas like repairs and maintenance and utilities are increasing faster than revenues, further squeezing margins. To navigate these pressures, hoteliers must adopt strategic approaches including optimizing operational efficiencies and diversifying revenue sources to sustain profitability.