Labor is the single largest controllable expense in hotel operations, and the most powerful lever for driving profitability. New industry data from the first nine months of 2025 reveals that US hotels achieved something remarkable: they maintained gross operating profit margins nearly on par with 2024 despite higher wages, more staff, and increased costs per occupied room.
The difference? They fundamentally changed how they used the labor they had.
This article draws from Actabl’s Q3 2025 Hotel Labor Data Report on HotelData.com, and a Hospitality Daily Podcast episode with commentary on this data from Sarah McCay Tams, Head of Research and Editorial for HotelData.com, who explained the trends shaping wages, overtime, headcount, and productivity across U.S. hotels. In that, she was joined by Shanell Marinuzzi, an experienced general manager and hotel leader who now advises hotel operators at Actabl, and Peter Kilbourne, Senior Vice President of lodging operations at CSM, who shared practical insights on staffing models, forecasting accuracy, cross-training, and using overtime strategically.
Hotel companies that led in efficiency during 2025 did so by treating labor data with the same level of attention they give to revenue data, making real-time adjustments based on demand, and implementing operational practices that protect both profitability, associate satisfaction, and guest satisfaction.
The 2025 Labor Landscape: What the Numbers Tell Us
The first nine months of 2025 presented hotel operators with a challenging environment. RevPAR forecasts were continually readjusted downward as revenue proved softer than anticipated. Yet despite this headwind, hotels found ways to maintain their margins through operational discipline.
Three key labor trends defined 2025:
Wage growth rose nominally above inflation. Average wages rose 3.7–5.9% year over year, with leadership roles seeing the biggest increases: general managers up 5.9%, guest services reps up 4.0%, maintenance engineers up 4.3%, and room attendants up 3.7%.
Staffing made modest gains. Headcount grew about 4% overall, with staffing levels climbing to roughly 9% above January levels at the late-summer peak before settling at about 4% above early-year levels by September.
Productivity improvements drove profitability. Hours per occupied room dropped 5.9% across all departments, from 0.49 hours in 2024 to 0.40 in 2025. Hotels used fewer labor hours for each occupied room while maintaining service levels, which directly translated to improved efficiency.
The Productivity Story: Efficiency Gains Across Departments
Breaking down the data by department reveals where hotels made the most significant strides in operational efficiency.
Guest services led the way with a 13.5% reduction in hours per occupied room. This reflects the continued evolution of service models, including mobile guest interaction, streamlined check-in processes, and more efficient handling of guest requests.
Housekeeping improved 7.1% in hours per occupied room. This department traditionally represents one of the largest labor expenses, so even incremental improvements create substantial savings across a portfolio. Room attendants specifically saw productivity gains of five to 10 minutes per occupied room at properties that invested in systematic retraining programs.
Management hours dropped 14.6% per occupied room. Leadership teams spent their time more efficiently, focusing on high-value activities rather than administrative tasks that technology could handle.
Shanell Marinuzzi, an experienced general manager and current account manager at Actabl, emphasized the importance of transparency here: “Technology allows you to see your blind spots. There are many times when you don’t know what you don’t know if you can’t see it in front of you.”
How Different Hotel Types Approached Labor Efficiency
Labor productivity varies significantly by hotel type, reflecting different service models and guest expectations.
Extended stay hotels delivered the strongest labor productivity at 1.3 hours per occupied room. The self-service nature of extended stay properties and less frequent housekeeping requirements create natural efficiency advantages.
Select service properties performed just above extended stay at 1.44 hours per occupied room, benefiting from streamlined operations and limited food and beverage offerings.
Full service hotels averaged 2.57 hours per occupied room, reflecting the increased service intensity required for restaurants, room service, and amenities.
Resorts showed the highest labor intensity at 4.48 hours per occupied room, with significant seasonal variation. Resort properties saw hours rise from a low of 3.66 hours in March to 5.44 hours in September, demonstrating how peak leisure months drive labor curves steeper.
For operators managing portfolios across multiple hotel types, these benchmarks provide context for setting realistic productivity targets and identifying outlier properties that may need operational support.
CSM Corporation’s Labor Transformation: A Case Study
CSM Corporation’s experience illustrates how systematic approaches to labor management create lasting improvements. Peter Kilbourne, Senior Vice President of Lodging Operations for the company, explained that in 2023, they launched two major initiatives that continue to deliver results today.
First, they implemented Hotel Effectiveness software across their portfolio, providing property-level teams with labor management tools they’d never had before. This gave managers real-time visibility into labor costs and productivity metrics.
Second, they launched the STEPS program by PDQ, which retrained housekeeping teams on efficient cleaning procedures. This single initiative drove productivity gains of five to 10 minutes per occupied room.
The results speak for themselves. As Kilbourne shared: “We found that those two initiatives alone more than paid for the investment we put into them, like twofold.”
But the transformation didn’t stop with technology implementation. CSM also shifted its hiring strategy, focusing on part-time associates rather than full-time staff. “Having more part-time associates allowed us to reduce cost of benefits, overtime exposure, and increased our scheduling flexibility,” Kilbourne explained.
This approach created operational agility. When one property headed into a slow period and needed to cut kitchen hours while simultaneously being short-staffed in engineering, management cross-trained cooks to support engineering during room preventive maintenance. The cooks maintained stable hours, the hotel improved room quality, and both associate and guest satisfaction increased.
Overtime: From Cost Risk to Flexible Tool
One of the most significant shifts in 2025 labor management was how hotels used overtime. Rather than viewing it solely as a cost overrun, leading operators deployed overtime strategically as a flexible buffer against demand fluctuations.
The data reveals this shift clearly. Room attendants saw overtime increase 12% from January to September. Housekeeping increased 19.7%, and laundry increased 25.6%. Yet this wasn’t runaway cost growth—it was calculated deployment of overtime in response to occupancy patterns.
Kilbourne explained CSM’s philosophy: “We have a rule of thumb that overtime must be strategic. We don’t want to drop a room at the end of the day out of fear of incurring overtime when we have the ability to potentially resell that room. We don’t want to turn away a banquet or an event out of fear of overtime. We just need to make sure there is a strategic reason for the overtime and that it has a return on investment.”
At the same time, leadership roles saw overtime decrease. Assistant GMs saw overtime drop 28.5% and GMs dropped 21.9%, reflecting more efficient time management at the leadership level.
One operational tactic proved particularly effective for controlling unnecessary overtime: locking time clocks. At CSM properties, employees cannot punch in or out beyond five minutes from their scheduled start or end time. Anything beyond that requires a manual time missed punch form and management approval.
“That’s helped quite a bit to control overtime and ensure that all of our properties are being very strategic with it,” Kilbourne said. Those incremental five or 10 minutes—multiplied across every employee, every shift, across an entire portfolio—add up to substantial costs that this simple control prevents.
Labor Cost Per Occupied Room: Understanding the Full Picture
While productivity improved across most positions, labor costs per occupied room continued to increase, averaging 5% across key roles. This isn’t contradictory—it reflects the reality that wages rose faster than productivity gains in some departments.
Maintenance saw the highest increase at 11.2%, potentially due to deferred maintenance from previous years finally demanding attention. Room attendants, representing the biggest labor expense in most hotels, saw labor cost per occupied room climb 9%.
Interestingly, general managers saw the lowest increase in labor cost at just 2%, as average hours for GMs decreased even while their wages rose. This suggests that GM productivity improvements offset wage increases.
These numbers underscore an important reality: hotels cannot count on labor cost relief in 2026. The priority must be protecting and extending the productivity gains achieved in 2025, not shrinking teams.
Five Operational Practices That Drove Results
Hotel leaders who improved labor efficiency in 2025 shared common operational behaviors. These practices can guide your approach for 2026.
Daily labor check-ins became standard practice. The most efficient properties implemented five-minute daily labor check-in tools that kept housekeeping leaders focused on individual productivity and identified when additional training was needed. This daily discipline prevented small problems from becoming costly patterns.
Cross-training became a retention and efficiency tool. Properties that cross-trained employees created scheduling flexibility while giving valuable team members the hours they needed. This reduced turnover of top talent to competitor properties while building a more versatile workforce.
Weekly labor meetings created accountability. Regular review of labor performance against targets kept teams aligned on goals. Marinuzzi noted that when she asks front desk staff what goal they’re working toward, many simply say “sell more rooms” rather than having specific, measurable targets. Properties that implemented weekly labor meetings with clear SMART goals saw better results.
Part-time hiring increased flexibility. The shift toward more part-time associates and fewer full-time employees reduced benefits costs, overtime exposure, and increased scheduling flexibility. While this approach requires higher headcount overall, it provides greater operational agility.
Technology caught blind spots. Automated systems that integrate with PMS data in real-time allow managers to adjust schedules based on actual booking patterns rather than static forecasts. This prevents both overstaffing during slow periods and understaffing during unexpected demand.
What 2026 Demands: Three Critical Shifts
Looking ahead, three areas will determine which hotels maintain margin leadership.
Forecasting must tie directly to labor. Forecasts improved on budget realism in 2025, but actual revenues still trailed re-forecasts by about 5%. With departmental productivity shifting between 7% and 15% and cost per room rising between 2% and 11%, even minor forecasting errors quickly misalign staffing with demand.
Kilbourne emphasized this point: “Your labor forecast is only as good as your top line forecast, both in rooms and in food and beverage. If both of those are not accurate, your labor forecasts are going to be terribly inaccurate.”
For 2026, hotels should integrate labor forecasting with booking pace rather than treating payroll as a static budget line. Properties near airports or in markets with high variability face particular challenges here, as do those in states with predictive scheduling laws that limit last-minute adjustments.
Efficiency matters more than cuts. With average wages rising 4-5% year over year, hotels cannot simply cut their way to profitability. The 5-15% productivity gains achieved in 2025 must be protected and extended through tools that connect labor data with demand forecasts, schedule rules, and profitability targets.
This means moving from occupancy-based labor standards to more granular measurements. CSM is shifting from four occupancy-based tiers to minutes per occupied room calculations. “If you went from 25% to 26%, you jumped a tier and that might be a jump of four hours with only one jump in 1% in occupancy,” Kilbourne explained. “When you move that to an MPOR based calculation, it will be completely variable and a lot more logical.”
Service models will continue evolving. Improvements in room attendant, housekeeping, front desk, and management productivity suggest that service models have already shifted. Stayover cleaning adjustments, mobile guest interaction, and simplified food and beverage offerings all contributed to the productivity gains visible in 2025 data.
The challenge for 2026 is refining these models while maintaining guest satisfaction and rate integrity. This requires careful attention to which service touchpoints truly drive guest satisfaction versus which represent legacy practices that add cost without corresponding value.
Getting Started: Practical Steps for 2026
If you want to capture similar efficiency gains at your properties, these actions provide a roadmap.
Audit your current labor data visibility. Can you see hours per occupied room by department in real-time? Do you know your overtime ratios? Can you track productivity by individual employee when needed? If the answer to any of these questions is no, improving data visibility should be your first priority.
Establish labor standards for every position. Move beyond basic scheduling to documented standards for how long key tasks should take. Room attendants should know their minutes per room target. Food and beverage teams should understand covers per labor hour. Front desk should have clear expectations for transaction times.
Create a weekly labor meeting rhythm. Set a consistent time each week to review labor performance against targets. Bring together department heads to discuss variances, identify trends, and adjust approaches. Make this meeting as important as your revenue strategy meeting.
Integrate your systems. Labor management systems should integrate with your PMS in real-time—ideally refreshing every few hours. This enables data-driven decisions based on actual occupancy and booking patterns rather than outdated forecasts.
Review your market segment mix. Analyze which segments are coming to your property and when. If you’re leisure-heavy on weekends, can you attract corporate business during the week? Understanding your segment mix allows you to staff more accurately and market more strategically.
Set clear goals with your team. Every team member should be able to articulate what they’re working toward. Whether it’s a specific hours per occupied room target, a cost per occupied room goal, or productivity improvements, clear goals focus effort and enable accountability.
The Path Forward
The hotels that maintained margins in 2025 despite softer revenue conditions did so by treating labor as their highest-leverage operational opportunity. They didn’t achieve this through cuts, but through better alignment of their workforce with actual demand.
As Marinuzzi summarized: “Does your team know your goal and what your focus is? When I train property leaders, I usually ask them to ask the front desk what the goal is. A lot of times no one knows the goal. They just say ‘we have to sell more rooms.’ I would challenge you to develop a smart goal as it pertains to your HPOR or your CPOR this year and really focus on that as a team.”
Labor efficiency drove 2025 performance. It will define 2026 winners as well. The data is clear, the playbook for winning has been proven, and the opportunity is yours to capture.
Want more? The Q3 2025 Hotel Labor Data Report draws on aggregated data from thousands of US hotel properties across extended stay, select service, full service, and resort segments.
