The hospitality industry may be headed for another difficult year, with profit margins tightening as operating and ownership expenses outpace revenue growth, according to CBRE’s latest 2025 investment performance forecast.
CBRE, the world’s largest commercial real estate services and investment firm, reports that hotels are grappling with sluggish revenue projections, persistent inflation concerns, and rising costs across nearly all aspects of service delivery. The slowdown in international travel to the U.S., combined with growing competition from alternative lodging options, is further compounding pressure on the sector.
Although revenue growth remained positive in March, momentum is clearly slowing. Revenue per available room (RevPAR)—a key profitability metric—increased by just 0.8%, reflecting a marked deceleration from previous months.
Industry experts warn that higher wages, maintenance expenses, insurance premiums, and financing costs are cutting deeper into profits, especially for independently owned or smaller hotel groups. Without a significant rebound in travel demand or easing of inflationary pressures, hoteliers may face another year of constrained margins and cautious investment.
The forecast underscores the importance for hospitality leaders to innovate operational efficiencies, explore diversified revenue streams, and closely monitor global travel trends as they navigate a shifting economic landscape.
