US Accommodation and Food Services Sector NAICS 72

Apr 13, 2025 - Hotels Facing Slower Growth

• A new analysis from Goldman Sachs forecasts inhospitable conditions for US hotel operators as multiple factors converge to dampen the industry's prospects. According to Goldman’s report released in mid-April, a key hotel industry metric – revenue per available room (aka RevPAR) – is predicted to grow at just 0.4% year-over-year in 2025. That would be below the trend of the past four weeks, when US RevPAR tracked about 1.6% higher, according to analytics firm CoStar. At the start of this year, hotel giants Marriott, Hilton, and Hyatt called for RevPAR growth of between about 2% and 2.5%. Goldman's dimmer outlook reflects emerging signs of consumer weakness, geopolitical uncertainty, and negative signals from US airlines. While stopping short of a full recessionary scenario in its forecast, the report’s authors noted that their economist colleagues at Goldman Sachs now forecast a 45% probability of a US recession.
• US hotels faced a challenging business environment in 2024 as rising costs outpaced revenue growth, according to the American Hotel & Lodging Association's (AHLA) 2025 State of the Industry Report released in February. The report found that property-level costs overall rose faster than revenue and that specific expenses associated with operations and maintenance, sales and marketing, and IT each rose nearly 5% last year, further intensifying a challenging hotel operations environment. “America’s small business hotel owners have been struggling as rising costs, compounded by high inflation and interest rates, make it difficult to stay open and serve guests,” said AHLA President & CEO Rosanna Maietta. In 2025, payroll costs will rise with hotels projected to add 14,000 employees and pay them a record of $128.47 billion in wages, salaries, and other compensation, up from $125.79 billion in 2024, per the AHLA report.

• With the exception of the pandemic-year 2020, 2024 set a record for restaurant bankruptcies, which increased by more than 50% versus 2023, Nation’s Restaurant News reported in December. Challenges facing food service providers last year included rising inflation and the cost of living, which caused consumers to pull back on dining out. Also, higher labor costs – up 33% since 2020 – and persistent food price inflation squeezed restaurant profits. To avoid a repeat in 2025, Ragini Bhalla of credit report provider Creditsafe, advises restaurant operators “know their finances in and out,” adding restaurants should regularly forecast and monitor their cash flow and plan for the unexpected, including not getting paid on time, which impacts cash flow. According to a survey of small businesses by Barlow Research Associates, 51% of restaurants do not seek cash flow advice from an accountant or bookkeeper.
• Employment by accommodation and food services firms grew 1% in February compared to a year ago while average sector wages rose 3.8% year over year in January to $19.24 per hour, according to the latest US Bureau of Labor Statistics data. Gross output by the sector and sales for food services and drinking places rose steadily in 2024, according to the Bureau of Economic Analysis. Looking ahead, sales for the sector are forecast to grow at a low compounded annual rate of just 0.23% from 2025 to 2029, slower than the growth of the overall economy, according to the latest forecast by the Interindustry Economic Research Fund, Inc.