By Nicole Beall, CEO, Xclusive Services
Coming into the second half of the year, there is reason to feel good about hospitality again. The American Hotel & Lodging Association’s 2026 State of the Industry report projects hotel guest spending will reach nearly $805 billion this year, up 1.7% over 2025.
That growth is running straight into a wall of operating expenses. Gross operating profit per available room is still hovering around 90% of 2019 levels. Labor alone totaled nearly $128 billion in wages and benefits last year and is projected to approach $131 billion in 2026.
CBRE’s data confirms the squeeze: hotel profit margins declined at both the gross operating profit and EBITDA levels in 2023 and 2024, because expenses grew faster than revenue. In 2024, expenses above GOP rose 4.1% year over year while total hotel revenue grew just 2.3%.
Faced with that pressure, most properties do what you’d expect: review contracts, compare vendors, scrutinize every line item. That is good discipline. It is also not the only lever available, and it is not always the one that improves the guest experience along with the cost line.
There is a real question underneath the obvious one: is there a way to cut cost and improve guest experience at the same time? There is. And the answer may separate the winners from the losers in hospitality over the next three to five years.
Hotels have historically run department by department. Housekeeping has one staffing partner. Janitorial runs through a different agency. Each department solves its own problem. Each vendor manages its own scope. Each contract gets evaluated on its own.
Every additional vendor is another relationship to manage, another schedule to coordinate, another invoice, another layer of reporting. Individually, manageable. Collectively, it creates the kind of complexity that quietly steals time, attention, and money — without ever showing up as its own line item on a P&L.
“Every vendor solves a problem. Too many vendors create another one.”
Staffing decisions influence service quality. Cleaning programs protect the guest experience and the physical asset. Overnight work sets up how smoothly the next day runs. Vendor performance touches managers, brand standards, and financial results. When each service gets planned independently, the opportunities to simplify, improve accountability, and cut overlap are easy to miss.
One property might be fighting unpredictable banquet volume or climbing overtime because managers spend too much time reacting to last-minute staffing gaps. Another might need a stronger overnight cleaning program that protects the kitchen and public spaces while making the next day’s operation run cleaner. Different starting points, same underlying opportunity: solving one operational challenge often reveals a way to improve another.
This does not mean every hotel should consolidate every service under one provider immediately. The strongest partnerships usually start with a single problem. Solve that well, build trust, understand the operation — then look at where more coordination creates value.
For a single hotel, that might mean aligning staffing and overnight janitorial so managers spend less time coordinating vendors and more time leading their teams. For a management company, it might mean finding the common needs across a portfolio. For an ownership group, it might mean reducing operational friction while protecting the long-term value of the asset.
Budget season is the right time to have this conversation. The best opportunities usually are not sitting inside any single line item. They are sitting in the gap between departments, where responsibilities overlap and complexity quietly adds cost that never shows up on a financial statement.
This is the conversation we think could change the industry. When we talk to a new or existing customer, we are not trying to be another staffing vendor or another janitorial line item. The goal is to help hospitality operators run more effectively, whether that starts with flexible staffing, overnight janitorial, or one department under pressure. Where it starts matters far less than building enough operational understanding to know where more coordination creates lasting value.
Approved purchasing channels like HSM and Avendra make it easier to engage a trusted partner without adding procurement complexity — but approval is the beginning, not the destination. The value comes from what the partnership makes possible: stronger coordination, clearer accountability, more flexible labor strategies, cleaner properties, and better use of every operating dollar.
Hospitality has always been a business of details, and none of them happen by accident. Cost pressure is not going away. Budget reviews will not get easier. Labor will stay one of the largest expenses hotel leaders manage.
The response does not have to stop at negotiating a lower price. Hotels have spent years optimizing individual contracts. The next opportunity is designing a better operation — one that is easier to coordinate, easier to manage, and less expensive to run because the pieces work together instead of independently.
Source Material
American Hotel & Lodging Association, 2026 State of the Industry. Used for: 2026 hotel guest spending, GOPPAR relative to 2019, industry labor cost totals. https://www.ahla.com/resource/2026-state-industry
CBRE, Hotel Operating Statistics (2023–2024). Used for: gross operating profit and EBITDA margin trends, expense growth vs. revenue growth.
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