By Jina Garza, Regional Manager of Operations; Yuritza Malloch, Director of Services; and Jose Saldana, Director of Services, Southwest Region
Hotel leaders are beginning to build their 2027 operating plans with less room for error.
Costs remain under pressure, persistent staffing challenges continue to affect properties across the country, and demand can shift significantly by market, segment and season. A 2026 survey from the American Hotel & Lodging Association found that goods and supplies, labor expenses, and fluctuating demand and occupancy were among hotel owners’ leading financial concerns. More than half of respondents also described their properties as somewhat or severely understaffed.
At the property level, that combination creates a familiar but increasingly difficult mandate: protect the guest experience while controlling costs in an operation that may not unfold exactly as forecast.
That is what makes planning for 2027 especially important. Hotels are not simply setting budgets or renewing contracts. They are deciding how the property will respond when occupancy changes, positions become difficult to fill, an event creates an unexpected surge or an important maintenance project can no longer be deferred.
Carrying forward the current operating model may produce a budget, but it may not provide the flexibility the hotel needs. Before renewing last year’s scopes of work and labor assumptions, leadership teams should ask a broader question: Is the way the hotel operates today the best way to support the year ahead?
Answering that question requires looking beyond individual proposals and line items. It means examining what actually happened during the past year, identifying where the existing plan created friction and determining where greater flexibility, coordination or advance preparation could improve performance.
After participating in hundreds of annual planning and contract discussions across multiple markets, we have found that the strongest conversations focus not only on what a hotel expects to purchase, but on how it intends to operate.
Hotel leaders enter the planning process with occupancy forecasts, labor budgets, LPOR targets and service expectations already taking shape. Those numbers provide an important starting point, but they should be tested against the property’s actual operating experience.
Where did staffing plans perform as expected, and where did overtime become more than an occasional necessity, driving up labor costs and CPOR? Which positions remained difficult to fill, and did those vacancies ever affect room availability, revenue or the guest experience? Did service levels adjust effectively as occupancy changed, or were departments regularly forced into last-minute scheduling decisions? Which engineering, maintenance or floor-care projects continued to be deferred because the opening anticipated in the operating calendar never materialized?
The difference between the plan and what actually happened often provides the clearest direction for the year ahead, particularly when an operational challenge can be traced to a measurable financial or guest-service impact.
A single busy weekend may not require a different staffing strategy. Several quarters of rising overtime and CPOR may. One hard-to-fill position may be manageable; recurring vacancies that leave rooms unavailable for sale are an operating and revenue problem. One delayed project may be a scheduling issue, while a growing list of deferred work could indicate that the hotel has not built sufficient capacity into its operating model.
Annual planning provides an opportunity to distinguish between temporary disruptions and recurring patterns before those patterns become embedded in another budget. The objective is not to revisit every challenge from the previous year. It is to determine which experiences should change how the property prepares for the next one.
Annual operating plans are generally built around the most likely forecast. That forecast still matters, but hotels increasingly need to prepare for a range of possible conditions.
Demand may remain healthy overall while varying considerably among markets and segments. CoStar and STR reported that U.S. hotel demand increased during the first part of 2026, but the gains were not distributed evenly. Group demand grew especially strongly in certain secondary markets, while pricing performance continued to differ significantly by chain scale.
Even major events can produce results that differ from initial expectations. In a May 2026 market analysis, 80% of hoteliers surveyed by AHLA said FIFA World Cup bookings were tracking below their original forecasts. Some markets were outperforming expectations, while others were seeing booking pace closer to—or below—that of a typical summer.
The lesson extends beyond any single event. Local demand drivers, booking patterns and operating conditions can change faster than an annual plan. A hotel may find itself carrying more fixed cost than occupancy supports during a slower period or struggling to find qualified people when demand exceeds expectations.
Planning for 2027 should therefore include a deliberate conversation about what is fixed, what is variable and where the operation needs room to adjust.
Every hotel requires a core level of labor regardless of occupancy. Variable labor should then rise and fall with demand, but the dividing line is not always as clear in practice as it appears in a spreadsheet. If a variable need occurs consistently enough, it may need to be addressed as a recurring part of the operating plan. If demand is especially volatile, the hotel may need a staffing structure that can expand and contract without repeatedly rebuilding the plan from the beginning.
The strongest 2027 plan will not necessarily be the one built around a perfect forecast. It will be the one that gives hotel leaders viable options when the forecast is imperfect.
Operational challenges rarely remain within the department where they first appear.
A conversation that begins with housekeeping may move into engineering because deferred projects affect room availability and scheduling. Engineering work may require overnight support, leading to a broader discussion about floor care, public spaces, janitorial services or maintenance. A staffing issue may reveal recruiting and retention challenges affecting several departments rather than a single position.
When each service is considered separately, those connections can be easy to miss. Annual planning is one of the few opportunities to step back from the daily pace of hotel operations and examine how the pieces fit together.
That broader view may reveal opportunities to coordinate work that has traditionally been planned independently. In some hotels, complementary services can be brought together under a more unified operating strategy. In others, the answer may be better communication, a shared calendar or closer coordination among department leaders and operating partners.
The objective is not to combine services simply for the sake of consolidation. It is to determine whether separate decisions are creating duplicated effort, unnecessary administrative work or gaps between departments. When complementary services are aligned thoughtfully, hotels may be able to simplify vendor management, improve communication and create efficiencies that are difficult to achieve when every department plans in isolation.
The conversation then becomes less about purchasing individual services and more about designing an operation in which departments support one another.
Planning for 2027 also provides an opportunity to reconsider how different labor needs should be addressed.
Not every vacancy requires the same solution. A short-term increase in occupancy, a difficult-to-fill permanent position and a recurring seasonal need create very different operational challenges. Treating them all as last-minute staffing requests limits the options available to the hotel.
If a property expects variable demand around a known event calendar, contingent staffing can be incorporated into the operating plan before those needs arise. If a position has remained open or repeatedly turned over, Direct Hire may offer a more sustainable solution than continuing to cover the gap through overtime or temporary adjustments. If several departments experience predictable seasonal pressure, recruiting and onboarding efforts can be coordinated rather than starting independently each time.
The right labor model may include a combination of core employees, contingent support and targeted permanent hiring. The annual planning process allows hotel leaders to establish where each approach makes the most operational and financial sense.
This is particularly important when labor availability cannot be taken for granted. Hotels expect staffing partners to respond when needs arise, but a dependable workforce cannot always be assembled on the day a request is made. Recruiting, screening, onboarding and preparing people for a particular property all require time.
The earlier the labor strategy reflects what the hotel is likely to need, the greater the likelihood that qualified people will be ready when that need becomes real.
One of the most valuable outcomes of the 2027 planning process is greater visibility.
Operating partners do not need certainty about every week of the coming year, but they need enough information to prepare. Anticipated occupancy, seasonal patterns, major events, planned renovations and known staffing challenges can all influence the recruiting and operational work that should begin well before a service is required.
Consider a property preparing for a major citywide event. If the staffing need becomes visible only a few days before arrivals begin, the available response may be limited by the local labor supply. If the event is incorporated into the operating plan months earlier, recruiting can begin sooner, qualified workers can be identified and onboarding can be completed without the same time pressure.
The same principle applies to slower periods. Advance visibility can help hotels schedule deep cleaning, floor care, maintenance or engineering work when occupancy is expected to create a better operating window. It can also help departments coordinate those projects so that one team’s schedule does not unintentionally create pressure for another.
Visibility does not eliminate change. It gives everyone more time and more options when change occurs.
That makes the relationship between the hotel and its operating partners especially important. Annual planning should establish not only what support is anticipated, but also how information will be shared throughout the year. Regular communication around forecasts, changing priorities and emerging challenges allows the plan to evolve before a manageable issue becomes an urgent one.
Every annual planning conversation eventually arrives at investment. The budget matters, but the more valuable discussion is what the hotel needs that investment to accomplish.
Is the priority to reduce overtime? Improve service consistency during peak periods? Complete deferred maintenance? Strengthen a department that has experienced repeated turnover? Simplify the management of multiple services? Create greater flexibility without adding unnecessary fixed cost?
Those goals can lead to very different operating plans. Without clear priorities, however, annual planning can become an exercise in adjusting individual line items without considering what those changes mean for the property as a whole.
Hotels rarely have unlimited resources, so strong planning requires explicit tradeoffs. A lower number in one part of the budget may shift cost or operational pressure elsewhere. Reducing flexible labor may increase overtime. Deferring a project may preserve spending in the short term while affecting room availability or maintenance costs later. Managing every service independently may appear to preserve control while adding administrative work and limiting coordination.
A broader planning conversation does not eliminate those tradeoffs. It makes them visible so hotel leaders can decide which choices best support guest service, financial performance and the condition of the property.
Once the priorities are clear, proposals and scopes of work can be structured around them rather than treated as a collection of unrelated services and prices.
Hotel leaders must make annual decisions without assuming that the coming year will follow a predictable path. That does not make long-term planning less valuable. It makes the quality of the planning more important.
The strongest 2027 planning conversations will still address budgets, scopes of work, service expectations and pricing. They will also examine how the property actually performed, which challenges became recurring patterns, how departments affect one another and where the hotel needs greater flexibility.
They will clarify which labor needs are fixed, which are variable and which may require a different recruiting strategy. Most importantly, they will give hotel leaders and their operating partners enough visibility to prepare together.
When annual planning works well, the hotel leaves with more than an approved budget or renewed contract. Its leaders leave with alignment around priorities, investment, staffing and operational expectations, along with a plan that can respond as conditions change.
The goal is not to predict every challenge 2027 may bring. It is to build an operating model capable of responding when the year develops differently than expected.
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