Hotels entered the year with high revenue expectations and tighter GOP targets, labor has shaped hotel performance more than any other cost category in 2025.
Budgets called for rooms revenue to grow 14.1% year over year in the first nine months of 2025, even as ADR was expected to decline between 1.9% and 2.4% (a deliberate pullback on rate in favor of occupancy growth).
At the same time, operators anticipated margin pressure. Budgeted GOP margin was set to decline by about one percentage point for January through September and by 1.3 percentage points for Q3 2025 compared with 2024, factoring in a softening in profitability to accommodate higher labor and operating costs. Actual results confirmed that profitability in 2025 depended less on rate and more on labor efficiency and scheduling accuracy.
In 2025, hotel leadership has had to factor in these three labor realities:
- Wage levels remained structurally higher than pre-pandemic norms.
- Forecasting accuracy mattered more than rate strategy.
- Efficiency, not headcount reduction, would drive profitability.
These conditions have set the stage for a year defined by operational discipline.
This report examines how US hotels managed labor during the first nine months of 2025*. The data shows improved productivity across departments, rising average wages, higher overtime exposure, and a modest increase in total headcount. Together, these shifts explain how hotels tried to protect margins in a year when top-line performance missed both budget and forecast.
*Data taken from approximately 5,000 hotels using Actabl’s Hotel Effectiveness labor optimization solution.
Executive Summary
Between January and September 2025, US hotels:
- Cut hours per occupied room in key departments.
- Improved minutes per occupied room for both frontline and supervisory roles.
- Accepted higher wages and cost per occupied room compared with the same period in 2024.
- Protected profit margins even as revenue missed both budget and forecast.
The labor data shows:
- Department-level hours per occupied room dropped by 7-15% across Guest Services, Housekeeping, and Management between January and September.
- Position-level minutes per occupied room improved by 6-15% within 2025 for many key roles.
- Average wages rose by 3.7 to 5.9% year over year, and labor cost per occupied room increased by 2-11.2% year over year, yet better deployment softened the impact.
- Headcount grew by 4.0%, providing more stable coverage, while overtime acted as a controlled buffer rather than a runaway expense.
Hotels did not grow margins; they prevented a sharper decline by making each hour of labor count more, even as those hours became more expensive.
Labor Productivity by Hotel Type
Hotel type continued to drive clear differences in labor intensity during the first nine months of 2025. The data shows that each category followed its own efficiency trajectory, shaped by service model, guest expectations, and operational complexity.
Read the full report here
