Q3 2025 Hotel Profitability: Margins Hold as Costs Rise
U.S. hoteliers demonstrated once again the growing complexity in managing the delicate balance between revenue growth and cost control, as revealed by the latest HotelData.com’s Q3 2025 Hotel Profitability Report. Based on performance insights from thousands of hotels using Actabl, the report shows that while top-line performance softened in some markets, profit margins remained resilient, a testament to more agile, disciplined operations.
Revenue Growth Eases but Profits Hold
Hoteliers started the year with optimism and expectations for revenue growth, albeit not at the levels seen in previous years. However, while demand remained stable, growth expectations had to be reset.
ADR averaged US$186.47 in the first nine months of the year, 4.9% below budget in Q3 and 3.8% below budget YTD.
RevPAR averaged US$119.22 in the first nine months of the year, amounting to 10.8% below budget in Q3 and 9.3% below budget YTD.
However, gross operating profit (GOP) margins held firm. For the first nine months, the GOP for all hotels averaged 37.7%. This meant that the GOP margin fell 1.5 percentage points below budget in Q3 and just 0.8 points below budget YTD.
In practical terms, this means that while revenue gains have plateaued, profitability hasn’t eroded; a significant shift from earlier recovery years when rising costs outpaced rate growth.
Regional and Segment Performance: The Midscale Advantage
HotelData.com introduced new tile maps for its Q3 2025 reporting. These identified the changes in performance at a state level. In terms of RevPAR, tourism hotspots such as California, Florida, and New York performed well, while states in the Midwest and West saw most months in decline.
When considering gross operating profit per available room (GOPPAR), Nevada and Hawaii were the only two states to see consistent positive performance. California and New York also enjoyed high GOPPAR. However, hotels in the Midwest have had 12 months of below-average performance.
The Q3 Profitability Report data also highlights diverging performance across asset classes. Luxury and independent hotels performed strongly in ADR and RevPAR. However, it was the middle of the field that proved the most profitable. Upper midscale hotels reported the highest GOP% of all chain scales. These operators, already experienced in lean staffing and simplified service models, were well positioned to maintain profitability in a flatter demand environment.
Profitability Outlook: Cautious Optimism into Q4 and 2026
Looking ahead, the industry enters Q4 on a stable footing. Rate growth is expected to moderate further, but profitability fundamentals remain strong thanks to a more sophisticated approach to cost management.
Operational discipline must continue if hoteliers are to end 2025 with healthy GOP margins despite macroeconomic uncertainty.
Download the Full Report
Explore deeper insights, market breakdowns, and detailed GOPPAR trends in the full HotelData.com Q3 2025 Hotel Profitability Report: https://actabl.com/resources/q3-2025-profit-report/
