cloudbeds Request a Demo

The Trends

In 2025, performance began to diverge across regions, property types, and traveler segments.

In 2026, those gaps are expected to widen. Below are the trends revealing where momentum is building and how independents can position themselves for what comes next.

Access report
Contents

International travel continues to
grow, but not evenly.

13% ↑ Asia Pacific
6% ↑ Europe
5% ↑ Latin America
4% ↑ North America

At the same time, ADR is softening, RevPAR is down, and competition is intensifying. For independent hotels, preparation matters more than ever.

Trend 1

Margins under pressure: Hotels shift from rate growth to profit discipline

For several years, rising demand allowed hotels to push rates upward, masking operational inefficiencies along the way. By mid-2025, that momentum began to slow. 

Travelers have become more cost-conscious, revenue growth has moderated, and operating costs continue to climb. The result is tighter margins and a shift in focus from rate growth to profitability.

When revenue isn’t enough

Labor remains the largest cost center:
60% in Europe
47% in North America
43% across Latin America & Asia Pacific

Costs of other inputs, including food and beverage, insurance, amenities, and utilities, have also increased.

Even if revenue grows, less of it now flows through to the bottom line. Independent hotels can’t rely on demand alone to carry performance. Efficiency and cost discipline are now central to protecting profitability.

Rethinking operational models

Protecting profit requires greater precision in cost structures and stronger coordination across teams. Leading operators are reassessing staffing models, revisiting menus and amenities, and scrutinizing utilities and fixed expenses. The goal is not simply to cut costs, but to better align spending with current demand patterns and guest expectations.

Technology and data are central to this recalibration. Systems that connect operations, marketing, and finance provide clearer visibility into where resources generate returns and where inefficiencies persist.

A change in emphasis

Revenue growth still matters. But in 2026, profitability and return on investment are taking equal weight in planning decisions.

For independent hotels without brand-scale leverage, discipline and operational clarity become competitive advantages.

“The takeaway for owners is straightforward: rate will not carry the 2026 budget. Stabilized revenue levels paired with a structurally higher expense base means profitability will depend on how efficiently the hotel is run, not simply how much it earns.”

Marcus R. Lee, Executive VP, Development at HVS

Trend indicators

$2.1 trillion

Projected international visitor spending in 2026, surpassing pre-pandemic levels.

Phocuswright
10% gap

Between 2025 GOPPAR and 2019 levels among U.S. hotels, driven largely by rising costs.

AHLA
11% of independents

In Europe track GOPPAR.

HES-SO Valais-Wallis University Survey

RevPAR grew in EMEA, but declined in all other regions.

Download the report to get the full regional and country breakdown.

Download the report
Trend 2

A widening gap: Luxury climbs, economy stalls

Beneath the headline performance numbers lies a growing divide. Not all hotels are competing on the same playing field.

In what economists call a “K-shaped” economy, affluent consumers continue spending on travel while middle- and lower-income households pull back amid rising living costs and economic uncertainty.

While overall growth has slowed, luxury hotels continue to capture demand and rate gains, midscale performance remains relatively flat, and economy hotels have faced persistent pressure.

A clear divide in performance

In the U.S., economy properties recorded 18 consecutive months of RevPAR decline through 2025

At the same time, short-term rentals are capturing more price-sensitive travelers, increasing their market share from:


9.9% in 2019
to

15.5% in 2025

Revenue mix matters

In a divided market, who your guests are matters as much as how many you attract.

Properties serving high-spend travelers are seeing stronger performance, while those dependent on budget-conscious segments face tighter margins and greater volatility.

Some operators are already repositioning. STR data shows more hotels exiting the economy tier than entering it, with independent properties leading conversions into higher-tier segments.

Moving upmarket, however, requires meaningful investment in product, service, and brand positioning at a time when capital and operating costs remain elevated.

Premiumization beyond luxury

Growth at the top end of the market is increasingly driven by premiumization — designing experiences that capture more revenue from high-value guests. Luxury hotels are refining offerings built around personalization, exclusivity, and convenience. For hotels, premiumization can include:

• Curated packages


• Priority services


• Culinary or wellness experiences


• Exclusive amenities or upgraded guest journeys

These offerings create differentiation and capture higher-value demand without requiring a full luxury repositioning.

Positioning for divergence

Operating in a bifurcated market requires clarity and flexibility in the business mix. Some operators are leaning into premium offerings to capture high-spend demand. Others are refining value-driven propositions while tightening cost control to compete more effectively for economy and midscale travelers.

For budget and midscale properties, waiting for a rebound is a risky strategy. The divergence reflects structural changes in consumer spending that are expected to persist for some time.

“We do not expect the economy segment to bounce back until the end of 2027. Expect luxury to continue to outpace other segments over the next few years.”

– Hannah Smith, Senior Analyst at STR

Trend indicators

10.6% RevPAR

Growth for ultra-luxury hotels in 2025, more than triple the broader hotel sector.

Financial Times
92% of travelers

Say value is important in travel decision-making, up from 83% last year.

Oxford Economics
58% of guests

Booked premium room categories, a record high.

Siteminder
Trend 3

The connectivity imperative: Systems and teams unite to meet today’s challenges

For years, disconnected systems were accepted as an unavoidable part of hotel operations, creating siloed data, duplicate reporting, and manual reconciliations.

Today, that fragmentation carries greater consequences. Yet many independent hotels still struggle to connect their technology stack. 

67% of independent hotels cite managing disparate systems as a top operational challenge.

At a time when profit margins are tighter, competition is intensifying, and effective use of AI depends on reliable information, integrating technology and teams has become a strategic imperative.

Rethinking efficiency

Labor remains the largest expense for most hotels, but the conversation is shifting. The question is less about adding staff and more about enabling existing teams to work with greater clarity and efficiency.

⅘ hotels spend the equivalent of one to two full workdays every week compiling reports and reconciling information across systems.

That is time diverted from strategy, guest engagement, and team development.

Automation with purpose

Automation is helping hotels reduce repetitive work across both commercial and operational functions — from rate management and guest messaging to maintenance workflows and reporting.

Nearly half of hospitality professionals believe that reservations, revenue management, and customer data handling will be largely automated within five years.

However, automation delivers meaningful results only when it runs on accurate, consolidated information. As AI tools move from recommendation to action, fragmented platforms limit their impact.

The rise of revenue marketing

As systems become more connected, revenue management and marketing are converging into a unified discipline: revenue marketing.

When pricing, distribution, and promotion operate from the same data foundation, decisions become more coordinated and intelligent. Profitability becomes the shared objective across the commercial function.

Beyond the commercial layer

Connectivity is also reshaping operations. With integrated systems:

• Energy use can adjust dynamically to occupancy levels

• Maintenance issues can be identified and resolved earlier

• AI-supported call centers can improve conversion rates

• Personalized recommendations can increase ancillary revenue during the stay

Each of these capabilities depends on systems that communicate seamlessly.

In response, many operators are consolidating core platforms such as the PMS, distribution, booking, and payments into more unified environments while maintaining flexibility through open integrations.

“After an era of frantic digital adoption, 2025’s hoteliers find that complexity, not capacity, is the chief brake on performance. Three core functions—Marketing & Sales, Distribution, and Revenue Management—report different day-to-day pain points that all trace back to the same root causes: fragmented data, demand signals, and a shortage of in-house technical depth.”

– HEDNA, The State of Distribution 2025

Trend indicators

92% of tech providers

View ease of integration as critical for hotels.

IDeaS
70% of hoteliers

Cite integration with existing systems as a top priority in AI investments.

h2c
25-35% increase

In conversion rates for reservation call centers using AI.

PwC

The rest of the trends are waiting.

Inside the full report, you’ll find the remaining trends, including:

  • The discovery reset
  • From answers to action
  • The rise of micro-segments
Free download
State of Independent Lodging 2026 Report