Hotel Owners Face 2027 Profit Squeeze as Costs Outpace RevPAR

Hotel owners face tighter margins in 2027 as operating expenses increase faster than room revenue, according to findings from the Hospitality Asset Managers Association (HAMA) Fall 2026 Industry Outlook Survey reported by Asian Hospitality [1]. With projected RevPAR gains slowing to between 1 and 3 percent, rising wages and liability insurance will restrict profit growth to just 1 percent [1].

What are the baseline growth projections for hotel revenue and profit through 2027?

Revenue growth is projected to outpace gross operating profit across the hospitality industry through 2027 [1]. Data from the HAMA Fall 2026 Industry Outlook Survey, which surveyed 72 asset managers representing roughly one-third of the association's membership, revealed that 97 percent expect RevPAR gains to persist into 2027 [1]. However, 61 percent of respondents anticipate that RevPAR expansion will slow to between 1 percent and 3 percent [1].

CoStar and Tourism Economics forecast that gross operating profit per available room (GOPPAR) will rise 4 percent in 2026 before contracting to 1 percent growth in 2027, Asian Hospitality reported [1]. STR President Amanda Hite noted that operating expenses are expanding faster than inflation in both years [1]. This divergence creates a performance disconnect where top-line metrics no longer guarantee bottom-line results [1].

Which operating expenses are squeezing hotel profit margins?

Payroll obligations and property-level coverage represent the sharpest operational cost increases confronting owners [1]. In the HAMA survey, respondents singled out demand, wage growth, and labor availability as primary operational pressures [1]. Specifically, 44 percent of surveyed managers identified rising wages as a main worry, while 39 percent cited shortages in labor availability [1].

Liability insurance premiums have also escalated, returning as an operational hurdle for portfolios [1]. Because RevPAR accounts solely for available room revenue and ignores variable operating overhead, properties hitting budgeted occupancy and average daily rates still encounter compressed bottom lines when local wages outrun inflation [1].

Why are hotel owners re-evaluating brand and management contracts?

Owners are re-evaluating long-term agreements because royalty and management fees erode returns when operating costs outpace revenue [1]. According to HAMA's survey figures, 51 percent of asset managers reported that they were actively considering or had already executed a brand or management change [1]. Within that group, 24 percent of respondents were considering changing both brand and management companies simultaneously [1].

These contract reviews force owners to weigh the commercial benefits of brand reservation distribution and guest loyalty programs against operating standards and system fee structures [1]. As GOPPAR growth drops to 1 percent, brand-mandated capital upgrades and system fees are facing scrutiny from ownership groups seeking to protect property cash flow [1].

How will tighter operating margins affect near-term debt refinancing?

Margin erosion directly impacts debt-service coverage ratios just as upcoming loan maturities arrive [1]. HAMA found that 21 percent of respondents need to refinance at least a quarter of their hotel portfolios within nine to 12 months [1]. Slower income growth complicates this process by restricting the cash flow available to cover debt service [1].

Lender selectivity, debt costs, and squeezed margins are deciding which hospitality deals proceed, according to research from Access Point Financial reported by Asian Hospitality [1]. With traditional financing hurdles putting new ground-up construction on hold, developers and operators are redirecting capital into asset renovations, brand conversions, and selective acquisitions [1].