Why Strong Hotel Revenue Doesn't Always Mean Strong Profitability

Hotel occupancy is up. Room rates are increasing. Revenue across the portfolio looks healthy.

But when the financial results arrive, profitability isn't keeping pace.

It's a frustrating scenario for hotel CFOs, particularly those managing multiple properties where operating costs, departmental performance, and financial reporting can vary significantly from one location to another.

The challenge isn't always generating more revenue. It's understanding how much of that revenue actually contributes to the bottom line.

For growing hotel groups, that requires looking beyond traditional hospitality metrics and developing a clearer picture of financial performance at the property, department, and portfolio levels.

Rising Hotel Costs Are Putting Pressure on Profitability

Hotel operators are navigating an increasingly challenging cost environment.

According to CoStar's analysis of U.S. hotel financial performance, total revenue per available room (TRevPAR) increased 7.2% in 2024, while gross operating profit per available room (GOPPAR) grew just 3.2%. During the same period, labour costs per available room increased 11.2%.

In other words, revenue was growing, but operating costs were absorbing much of the benefit.

And the pressure continues.

A 2026 survey from the American Hotel & Lodging Association found that 71% of surveyed hoteliers cited rising costs for goods and supplies as a financial challenge, while 65% identified labour expenses.

Canadian hotels are experiencing similar pressures. Statistics Canada reported that operating revenue for hotels, motor hotels, and motels increased 4.1% in 2024, while operating expenses rose 5.0%, contributing to a decline in industry operating profit margins.

For CFOs, these trends reinforce an important point: revenue growth alone is no longer a sufficient measure of financial success.

The focus needs to shift toward understanding what is driving profitability and where operating costs are eroding margins.

Looking Beyond RevPAR to Understand Hotel Profitability

Most hotel executives regularly monitor occupancy, average daily rate (ADR), and revenue per available room (RevPAR).

These metrics provide valuable insight into room revenue performance, but they don't tell the entire financial story.

• ADR (Average Daily Rate) measures room revenue divided by rooms sold, providing insight into room pricing performance.
• RevPAR (Revenue per Available Room) measures room revenue relative to available inventory, calculated by dividing room revenue by available room-nights or multiplying ADR by occupancy.
• GOPPAR (Gross Operating Profit per Available Room) measures gross operating profit divided by available room-nights, incorporating revenues and operating expenses across the hotel.

While ADR and RevPAR show how effectively a property generates room revenue, GOPPAR provides a broader understanding of operating profitability.

Consider two hotels with similar occupancy levels and room rates.

One may generate stronger operating profits through efficient labour scheduling, better food-and-beverage margins, and disciplined procurement. The other may struggle with overtime, rising supplier costs, or inefficient departmental operations.

Their revenue metrics could look nearly identical, but their financial contributions to the portfolio may be very different.

This is why hotel CFOs need to evaluate revenue, operating expenses, and profitability together rather than relying on individual performance indicators.

The Challenge of Financial Reporting Across Multiple Hotels

As hospitality organizations expand, financial reporting often becomes increasingly complex.

Each property may operate its own property management system (PMS), restaurant point-of-sale platform, payroll solution, and accounting processes.

While these systems support daily operations, consolidating their financial information can create significant work for the finance team.

For example, one property may classify certain expenses differently from another. Different accounting structures may make departmental comparisons difficult, while manual reconciliations can delay consolidated reporting.

Finance teams often find themselves exporting data into spreadsheets, adjusting account classifications, reconciling balances, and assembling property-level reports.

The challenge becomes even greater when managing multiple legal entities, currencies, or shared services.

And the problem isn't simply the time spent preparing reports.

When financial information arrives late or lacks consistency, management loses valuable time to act on emerging issues.

A property experiencing rising housekeeping costs or declining restaurant margins may not receive attention until the monthly reporting cycle is complete.

For CFOs overseeing a portfolio of hotels, better financial visibility means being able to identify those issues earlier and understand their impact across the organization.

Connecting Hotel Operations With Financial Performance

Improving profitability requires more than cutting costs.

In hospitality, reducing expenses without understanding their operational impact can affect service quality and guest satisfaction.

The better approach is to connect financial results with the activities driving those costs.

For example, housekeeping expenses should be evaluated alongside occupied rooms and labour hours. Restaurant profitability should consider food costs, staffing, sales, and guest covers. Utility expenses should be reviewed against occupancy trends, seasonality, and property characteristics.

This allows finance and operations teams to identify meaningful differences between properties and determine where adjustments may be appropriate.

It also helps hotel groups understand the financial contribution of departments beyond rooms.

According to CoStar's research on hotel revenue management, rooms account for approximately 68% of total hotel revenue on average, with the remaining 32% generated by areas such as food and beverage, parking, and spa services.

For full-service hotels and resorts, these additional revenue streams can represent significant opportunities, but they also introduce different cost structures and operational challenges.

Having consistent departmental financial reporting helps leadership evaluate which activities generate profitable growth and where operating improvements may be needed.

How Modern Financial Management Supports Multi-Property Hotels

For many growing hotel groups, the next step is evaluating whether their financial management systems can provide the visibility the business requires.

Traditional accounting systems may be sufficient for an individual property but become difficult to manage when an organization expands across multiple hotels, legal entities, and operating departments.

This is where a cloud-based financial management solution such as Sage Intacct can play an important role.

Unlike hotel property management or revenue management systems, Sage Intacct focuses on accounting, financial reporting, and business performance.

For multi-property hospitality organizations, relevant capabilities include:

• Multi-entity consolidation: Consolidating financial information across multiple legal entities while maintaining detailed reporting.
• Dimensional reporting: Analyzing financial results by property, department, location, and other configured reporting dimensions.
• Financial dashboards: Providing leadership with accessible financial information and budget-to-actual comparisons.
• Budgeting and planning: Supporting financial forecasts and financial planning through appropriately licensed capabilities.
• Expense allocations: Distributing shared costs across properties or departments using defined allocation rules.

Sage Intacct can also form part of a broader financial technology environment that exchanges information with hotel operating systems, subject to the capabilities and integration requirements of each platform.

The goal isn't to replace the systems hotels rely on to manage reservations, guests, or room pricing.

It's to establish a financial foundation that gives CFOs a consistent view of performance across the organization.

A Hospitality Example: Tetherow Resort

Tetherow, a resort in Bend, Oregon, faced growing financial complexity as its business expanded to include a boutique hotel, restaurants, golf operations, vacation rentals, and events.

Tetherow managed 20 entities across three wholly owned subsidiaries using a combination of Jonas software, QuickBooks, and Excel.

Following its Sage Intacct implementation, Tetherow reported reducing monthly financial consolidations from more than a week to less than four hours. Its monthly financial close also decreased from 20 days to under 10 days.

The resort continued using its ResortSuite hospitality management system, uploading financial and statistical information into Sage Intacct to support more detailed management reporting.

Better Financial Reporting Also Means Better Forecasting

Historical reporting is important, but its greatest value comes when it helps leadership make better decisions about the future.

For hotel CFOs, forecasting involves understanding how changing occupancy, room rates, labour requirements, and seasonal demand may affect profitability and cash flow.

A property expecting lower occupancy in the coming quarter may need to adjust staffing plans, purchasing, and discretionary spending.

Similarly, a hotel group considering an acquisition or major capital investment needs to understand its existing financial commitments, liquidity requirements, and expected operating performance.

Consistent property-level reporting provides a stronger foundation for evaluating these scenarios.

It also helps finance leaders distinguish temporary fluctuations from underlying operating trends, allowing management to make more informed decisions about resource allocation and investment priorities.

For a deeper look at cost structures, financial KPIs, forecasting, and hospitality financial management, download our complimentary e-book:

Mastering Financial Performance in Hospitality — A Guide for Hospitality CFOs

Is Your Hotel Group's Financial Reporting Keeping Pace With Growth?

As your hotel portfolio expands, it's worth evaluating whether your existing financial processes can support the organization's needs.

Consider these questions:

1. Property profitability: Can you produce reliable financial results for every property and department without extensive manual work?
2. Reporting consistency: Are financial results classified and presented consistently across the portfolio?
3. Cost visibility: Can management identify labour, procurement, and operating cost variances early enough to respond?
4. Financial consolidation: Can you efficiently consolidate multiple entities while maintaining detailed property-level information?
5. Forecasting: Can you evaluate how changing market conditions and operating assumptions affect profitability and cash flow?

If several of these questions are difficult to answer, your financial management systems may be limiting the visibility needed to manage the business effectively.

Building a Stronger Financial Foundation for Hotel Growth

For multi-property hotel groups, improving financial performance isn't simply about generating more revenue.

It's about understanding how revenue translates into profitability, identifying the costs affecting margins, and giving management the information needed to make timely decisions.

As hotel portfolios become more complex, reliable financial reporting becomes increasingly important for managing operations, planning investments, and supporting growth.

At Rogers West, we help organizations evaluate, implement, and optimize Sage Intacct financial management solutions, with a focus on multi-entity accounting, financial reporting, and improving finance processes.

If your hotel group is looking to strengthen property-level profitability reporting and gain better visibility across its portfolio, we'd welcome a conversation about your current environment and financial management priorities.

Learn more about Rogers West's Sage Intacct implementation services.

‍