Walk into almost any hotel lobby in 2025 and you’ll see it: teams doing more with less. Staffing boards show vacancies. Associates are covering multiple roles. Leaders are stretching budgets while still aiming for service excellence.
According to HotelData.com, labor cost per occupied room (CPOR) for H1 2025 was up 6.6 percent year over year, while STR is predicting a 0.1 percent year-over-year decline in U.S. hotel RevPAR for full year 2025. In certain urban and resort destinations, wages for line-level roles have increased by double digits over the past two years. For owners and operators, labor remains the single largest operating expense, and that expense is growing faster than the revenue to offset it. This is no longer a cyclical blip—it’s a structural challenge that demands a structural response.
The Business Reality
When RevPAR growth is flat or slowing, the profitability levers are clear:
- Increase revenue—often constrained by market conditions.
- Reduce costs—with labor as the biggest line item.
- Improve productivity—the most sustainable and controllable lever.
Cutting hours or positions can only go so far before the guest experience suffers. That’s why the conversation is shifting from “spend less” to “spend smarter”—investing in tools, processes and talent strategies that get more value from every labor dollar.
Top-performing properties aren’t simply running leaner—they’re better at aligning staffing to demand, cross-training associates and using technology to eliminate low-value work.
Retention as a Profit Strategy
Turnover is an invisible tax on profitability. Recruiting, onboarding and training a new associate can cost thousands of dollars before that person is fully productive. And the higher up the chain scale, the more those labor dollars cost.
The Rooms Division accounts for the largest share of labor spend, often representing 40-50 percent of total labor costs. HotelData.com broke that down by chain scale and found that average costs per occupied room (CPOR) for Extended Stay properties were $26.29 while CPOR for Select Service stood at $28.28 and average costs for Full Service properties were $57.59, while CPOR for Resorts stood at $123.60.
The data shows that actual labor costs came in higher than budget in April and May 2025. That spring spike may point to higher turnover and training costs or it could be the result of scheduling gaps and added overtime. Either way, it pressures margins at a time when RevPAR growth is limited—and it adds stress for associates on the floor who are covering shifts. The business impact and the human impact go hand in hand.
From my experience—on the hotel side and now at Actabl—retention isn’t just about pay. Associates stay where the tools are modern, the workload is reasonable and leadership invests in their success. That’s why the associate experience with technology matters just as much as the guest experience. If your front desk software takes 10 clicks to complete a task that should take two, you’re adding friction to an already demanding role.
Lessons From the Front Line
Earlier in my career, I spent days—sometimes nights—side by side with front desk agents, housekeepers, engineers and concierges. I learned quickly that “corporate priorities” can be irrelevant if they don’t work in the real world. Cash registers don’t ring at the corporate office; they ring at the front desk, in reservations and online.
When you see a night auditor juggling manual reports while answering guest calls or a housekeeper chasing a paper work order across the property, you understand why turnover happens. Fixing those moments by removing friction pays dividends in morale, productivity and retention.
Four Levers That Work
From what we’ve seen across thousands of hotels—and supported by market data—four levers consistently deliver results.
- Data-driven scheduling: Use demand forecasting and labor management tools to align staffing with real occupancy and event patterns. The most efficient operators measure schedule accuracy weekly, not just at month-end.
- Technology that fits the day job: Minimize training time and clicks. Interfaces should feel intuitive, like the phone in your pocket. Adoption rises when tools match how people naturally work.
- Property champions: Identify associates who can lead change on property. Give them the authority, training, and recognition to be the bridge between corporate goals and day-to-day reality. This role can be a career accelerator.
- Continuous care and feeding: Technology isn’t “set it and forget it.” Assign ownership for keeping systems tuned to current needs and maintain a feedback loop with your vendor partner.
Tapping the Talent Pipeline
We can’t solve labor cost pressures without addressing the talent pipeline. Recruiting, retaining and developing great people is just as important as optimizing schedules. The best operators see every technology project as a chance to grow internal talent—whether that’s promoting a property champion, cross-training associates or giving high-potential leaders visibility with corporate.
When associates see that you’re investing in their success—through better tools, clear processes and growth opportunities—they’re more likely to stay. That stability translates directly into lower hiring costs, faster service and higher guest satisfaction.
Bringing It All Together
Labor cost challenges aren’t going away. The properties that win in 2025 will be those that treat efficiency, retention and technology adoption as a single strategy—not three separate initiatives.
In a flat-RevPAR world, the surest path to margin improvement is unlocking more value from your existing labor investment. Start by making the associate experience as frictionless as the guest experience.
Andrew Arthurs is president and COO, Actabl.
This article was originally published in the September edition of Hotel Management magazine. Subscribe here.