HotelData.com released its Q1 2026 Hotel Profitability Performance Report showing U.S. hotels entered the year with stronger demand, higher occupancy and improved profit margins compared with early 2025, while forecasts for the remainder of 2026 have grown more cautious.
The report points to a widening performance gap across chain scales, with luxury hotels continuing to outperform and economy properties facing ongoing revenue pressure. The analysis is based on aggregated data from thousands of U.S. hotels using Actabl’s operational and financial platforms.
At the all-hotels level, average daily rate increased 6.0 percent year over year to $202.63. Revenue per available room rose 8.7 percent to $129.46, while total revenue per available room increased 9.4 percent to $174.83, reflecting stronger total guest spend. Occupancy rose 1.5 percentage points to 64.3 percent, indicating gains driven by both pricing and demand conversion.
Profitability improved at a faster pace than revenue. Gross operating profit margin increased 4 percentage points year over year, rising from 37.8 percent to 41.8 percent, supported by tighter operational discipline and improved revenue flow-through. While multiple chain scales recorded gains, the report reinforced ongoing industry bifurcation.
“Q1 showed that demand is still there, but profitability is increasingly coming down to how effectively hotels convert that demand into revenue,” Sarah McCay Tams, head of research and editorial at Actabl, in a statement. “Hotels are not necessarily struggling to fill rooms. The bigger challenge is generating the level of guest spend and profitability many operators originally planned for. The quarter reinforced how uneven the market has become, with luxury continuing to outperform while other segments face softer pricing and revenue pressure.”
Luxury hotels delivered the strongest performance in the quarter, posting the largest gains in RevPAR, TrevPAR and gross operating profit margin. Economy hotels remained under pressure, with declines in ADR, RevPAR and TrevPAR, though margins improved modestly through tighter cost controls. Independent hotels saw slight margin compression despite modest TrevPAR growth.
Ancillary revenue continued to be a key differentiator across segments. Luxury and independent hotels generated the largest TrevPAR premiums above rooms revenue, driven by higher spending on food and beverage, resort fees, spa, golf and other ancillary services. Economy hotels posted the smallest TrevPAR premium at 5.2 percent, underscoring ongoing performance divergence.
Looking ahead, operators are forecasting a more cautious environment for the second through fourth quarters of 2026. ADR is expected to rise 1.6 percent compared with Q2–Q4 2025 actuals, while RevPAR is forecast to decline 1.3 percent and TrevPAR to fall 2.6 percent. Occupancy is projected to remain relatively stable, suggesting softer pricing power and guest spend may create greater pressure on revenue growth than demand itself.
While Q1 delivered broad year-over-year improvements, the report indicates operators are entering a more margin-sensitive environment. Forecast occupancy remains slightly above budget expectations, but revenue projections have reset lower than many hotels originally planned.
Rather than preparing for a demand shortfall, hotels are bracing for a more challenging revenue landscape in which protecting rate, maximizing ancillary revenue and maintaining disciplined cost control will be critical through the remainder of 2026.
Key Findings:
Q1 performance improved across core metrics year over year
- ADR rose 6.0 percent
- RevPAR increased 8.7 percent
- TrevPAR increased 9.4 percent
- GOP percent improved 4 percentage points
- Occupancy increased 1.5 percentage points
Demand conversion improved alongside pricing
- RevPAR outpaced ADR growth during Q1
- Occupancy improved each month compared to Q1 2025
- March delivered the quarter’s strongest performance across ADR, RevPAR, TrevPAR, and occupancy
Luxury hotels led Q1 growth while Economy remained pressured
- Luxury posted the strongest TrevPAR growth and largest GOP percent improvement across chain scales
- Economy hotels experienced declines in ADR, RevPAR, and TrevPAR, though GOP percent still improved through tighter operating control
- Independent hotels saw slight margin compression despite modest TrevPAR growth
Ancillary revenue remained a major differentiator
- Luxury and Independent hotels generated the largest TrevPAR premiums above rooms revenue alone, driven by larger spend across F&B, resort fees, spa, golf, and other ancillary services
- Economy hotels showed the smallest TrevPAR premium at just 5.2 percent, reinforcing ongoing performance divergence across segments
- The data highlights the growing importance of maximizing total guest spend beyond room revenue
Operators are forecasting a more cautious Q2-Q4 environment
- ADR is forecast to rise 1.6 percent compared to Q2-Q4 2025 actuals
- RevPAR is forecast to decline 1.3 percent
- TrevPAR is forecast to decline 2.6 percent
- Occupancy is expected to remain relatively stable, suggesting softer pricing power and guest spend may create more pressure on revenue growth than demand itself