FeaturedfinanceLodging Magazine··1 min·For: Owner, GM, Revenue, Investor
Hotels Face Profit Erosion as Flow-Through Drops to 18%
Despite record top-line revenue, rising operating and distribution costs caused average hotel flow-through in the Americas to fall to just 18% in 2025. Evaluating profit conversion alongside RevPAR is critical to prevent margin dilution from volume-driven growth and high OTA commissions.
Key Takeaways
- 1Hotels in the Americas averaged an 18% flow-through in 2025, down sharply from historical averages of roughly 50%.
- 2Guest acquisition costs per room rose 25% since 2019, outpacing RevPAR growth of 19% and eroding GOP margins.
- 3Higher occupancy often brings escalating variable labor and OTA commission costs that rate-driven growth does not.
Source: Lodging Magazine
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