NEW YORK — Cost pressures on hotel operations are starting to take a toll as U.S. hotel industry performance chugs along.
Amanda Hite, president of STR, a part of CoStar Group, said in a video interview at the recent NYU International Hospitality Investment Forum that "the pace of expense growth is outpacing the pace of revenue growth, and labor expenses are starting to pick back up."
"The difference now is for owners," she said. "When you look at profitability, there are more owners making less money today than they were last year at this time."
Profits are flat to down depending on segment, market and other factors.
But while those pressures do and will continue to weigh on hotel owners, the overall outlook for the industry is OK because of bright spots in demand growth and higher-end hotel segments, Hite said.
"Overall, ... demand actually is better right now than it was this time last year," she said, citing STR's May data that hotel demand rose 0.5%.
Demand continues to go more into luxury and upper-upscale hotels and to top 25 cities, including Northeast markets such as New York, Boston and Philadelphia, which have stood out as high performers for the first half of the year.
As for worries over a lack of international inbound travel to the United States, Hite isn't concerned.
"International inbound demand represents 5% of our total U.S. hotel demand, so it's not as hugely impactful to the numbers as some other things might be," she said, adding that this element really is market-specific.
"New York is a market that depends heavily on international inbound, but it's doing fine," she said.
Global economic uncertainty continues to weigh on hotel performance, she said. That factored into the revised CoStar/Tourism Economics forecast released at the event.
But at the end of the day, Hite said that history repeating itself can be a positive.
"We know how to weather a slow economic environment," she said. "That gives people some certainty, because we've been through it before."