Higher revenue can deliver more profit while leaving a hotel with a lower margin. The operating question is how much of the additional business survives the cost of serving it.
Hotel GOP is trailing RevPAR in 2026 budget confidence: 57% of asset managers in HAMA’s latest survey expect most of their hotels to beat budgeted RevPAR, against 51% for gross operating profit. The gap measures expectations against financial plans, not measured profit performance or a six-point decline in margins.
Table of Contents
1. Revenue grew, but hotels retained less of each euro
European hotels increased revenue and operating profit in 2025, but retained a smaller share of each euro of revenue. Cushman & Wakefield’s analysis of more than 2,000 hotels in the HotStats database found that total revenue per available room grew 3.3%, while payroll per available room increased 5.7%. GOP per available room rose 2.1%, but the GOP margin declined 0.4 percentage points to 35.7%.
European hotel revenue and cost growth, full-year 2025
| Measure | Change against 2024 |
| RevPAR | +3.1% |
| Total revenue per available room | +3.3% |
| Payroll per available room | +5.7% |
| Total operating expenses per available room | +3.9% |
| GOP per available room | +2.1% |
Source: Cushman & Wakefield, Europe Market Spotlight — FY 25, using HotStats data from more than 2,000 European hotels.
The monetary changes show where the additional revenue went. Total revenue increased by €6.1 per available room, while expenses rose €4.7. Payroll accounted for €3.3 of that additional expense. The report put GOP flow-through—the share of incremental revenue retained as incremental GOP—at 23.5%.
That is a more consequential operating finding than revenue and profit simply growing at different rates. GOP reached €69.3 per available room, yet revenue growth did not prevent margin dilution. For an owner, the hotel generated more operating profit; for the operating team, the extra revenue carried a heavier expense burden.
Payroll was not merely one item in a uniformly rising cost base. European utility costs declined 1.3% in 2025, providing some relief, while payroll increased. The aggregate payroll figure does not, however, separate higher hourly wages from additional hours or changes in staffing mix. It identifies where much of the expense increase occurred, rather than explaining every component of it.
2. Wage pressure becomes a budget problem through the variance
Labour also ranks prominently in HAMA’s survey: 44.44% of respondents selected wage increases among their leading concerns, and 38.89% selected labour availability. Demand ranked first at 55.56%, placing the cost of staffing alongside uncertainty over the business those employees will serve.
A higher wage bill does not automatically explain a missed profit budget. A pay increase already included in the plan raises the cost base, but does not create an adverse variance by itself. The relevant distinction is between costs that were anticipated and costs—or staffing requirements—that exceeded the assumptions behind the revenue target.
Official wage decisions illustrate why that exposure differs between hotels. In the UK, the National Living Wage for workers aged 21 and above increased 4.1% to £12.71 an hour on 1 April 2026. The minimum rate for 18–20-year-olds rose 8.5% to £10.85. Workforce age mix therefore changes a hotel’s direct exposure: one national percentage cannot describe the increase across every property’s wage bill.
Australia’s minimum award wages increased 4.75% from the first full pay period beginning on or after 1 July 2026, subject to specified minimum-rate floors. As with the UK changes, the effect on any given hotel depends on the employees covered, their existing pay and the portion of the reporting year affected. These statutory increases are cost inputs, not measurements of hotel payroll growth.
For a budget review, hourly cost and paid hours answer different questions. The former helps locate pay-rate pressure; the latter helps establish whether the hotel required more labour than planned to deliver its revenue. Combining the two into a single payroll variance can obscure whether the shortfall lies in wage assumptions, staffing volume or the mix of business being served.
3. Japan and Australia show margins can improve
The European result is not an unavoidable consequence of higher operating costs. In HotStats’ full-year 2025 benchmarks, Japan’s RevPAR increased 13.1% and GOPPAR rose 16.1%; Australia recorded increases of 9.5% and 12.0%, respectively. Profit grew faster than room revenue in both markets.
The first-half 2026 total-revenue comparisons make the margin point more directly. Australian total revenue per available room rose 4.3%, while GOPPAR increased 5.8%. Faster profit growth than total revenue growth indicates an improvement in the GOP margin within that benchmark, rather than the dilution recorded in Europe during 2025.
These results make the local revenue-and-cost relationship more useful than a universal assumption about deteriorating profitability. They do not establish which staffing, pricing or operating decisions produced the difference.
HAMA does not disclose its respondents’ markets, so the European and Asia-Pacific benchmarks and UK and Australian wage rules illustrate how the mechanism can work, not what happened in respondents’ own hotels.
4. The benchmark that matters is the conversion assumed in the plan
Europe’s 23.5% flow-through is an observed result from a particular sample, not a universal target. Its significance is that most of the additional revenue was absorbed by additional expenses, with payroll accounting for much of the increase.
A hotel’s own budget contains a more specific test: the operating contribution expected from its forecast revenue. Comparing actual total revenue and GOP with that plan establishes whether additional business is producing the expected return. Departmental results, paid hours and effective hourly costs can then help locate the difference without treating all payroll growth as wage inflation.
A RevPAR beat and a higher GOP figure can both be genuine achievements while still leaving the hotel below its planned profit conversion. The practical question is: is the hotel’s revenue gain converting at the rate the budget assumed?
Data Source
- HAMA, Hospitality Asset Managers Association Releases Fall 2026 Conference Industry Outlook Survey Results, 13 October 2026. The association’s release covers 72 asset managers, approximately one-third of membership; the supplied survey contains the detailed response counts used here.
- Cushman & Wakefield, Europe Market Spotlight — FY 25, 27 March 2026, updated 30 March. The analysis uses HotStats P&L data from more than 2,000 European hotels for the 12 months ending December 2025.
- HotStats, What H1 2026 Tells Us About APAC Hospitality’s Next Chapter, 11 August 2026. The publication compares Japan, Singapore, Australia and Southeast Asia across full-year 2025, rolling-year and January–June 2026 periods; it does not disclose the hotel sample count.
- Low Pay Commission, The National Minimum Wage in 2026, 1 April 2026. This official publication specifies UK statutory minimum rates and annual increases by age group, rather than hotel-sector payroll outcomes.
- Fair Work Ombudsman, Minimum Wages Increase from 1 July 2026, updated 1 July 2026. This official guidance sets out Australia’s national minimum and minimum award-wage changes, their scope and their effective dates.
