The global hotel industry in 2025 looks strikingly different compared to its pre-pandemic state. While the early stages of Covid-19 wreaked havoc across the sector, those who weathered the storm have reaped significant rewards.
"There's going to be an opportunistic play for someone willing to carry those hotels for the next year or two," said Acres Capital CEO Mark Fogel in 2020.
Years of cost-cutting and operational streamlining have paid off for many hotel operators, leading to higher profit margins compared to record-setting years before the pandemic.
Labour costs, long a significant expense, were drastically reduced as daily housekeeping became an optional service in most properties. Despite labour unions such as Unite Here opposing these cuts, calling them “an economic move” rather than a safety measure, the changes have largely persisted.
While occupancy and revenue per available room (RevPAR) have gradually improved since 2020, the recovery remains uneven, particularly for convention-focused hotels.
These properties have adopted alternative revenue strategies, such as work-from-hotel programmes and partnerships with coworking firms, to compensate for reduced corporate and event bookings.
Leisure travel dominates, corporate bookings lag
The recovery has been bolstered by a surge in leisure travel, which has outpaced pre-pandemic levels in some markets. This rebound reflects pent-up demand and the lingering effects of widespread lockdowns.
However, corporate travel—a key revenue driver for urban and convention hotels—has yet to recover fully. Companies that have reduced their office footprints now rely on quarterly meetings held in surviving convention hotels.
Some businesses have also adopted the work-from-hotel model for flexible office solutions, creating limited but steady revenue streams for these properties. However, this shift has not been enough to offset the decline in large-scale corporate events.
Hotels have also faced growing competition from short-term rental platforms like Airbnb and Vrbo. Recognising changing consumer preferences, major hotel brands, including Marriott and Four Seasons, have expanded into the short-term rental market to capture new revenue opportunities.
Unbundling services and shifting business models
The hotel industry's evolution mirrors changes seen in the airline sector, with services once included in room rates now offered on an à la carte basis. Budget-conscious travellers tolerate these changes due to a lack of alternatives, as competitors adopt similar fee structures.
Mobile check-in and contactless services, introduced during the pandemic as safety measures, have become standard. Guests now expect such features as part of the modern hotel experience.
Meanwhile, urban hotels grappling with low occupancy rates have explored conversions into residential developments, a trend alleviating housing shortages in some cities.
Despite these challenges, the sector's resilience has been evident in its adaptability. From leveraging alternative revenue streams to embracing new business models, the hotel industry demonstrates that survival requires innovation.
As leisure travel thrives and corporate demand slowly rebuilds, hotels continue to navigate a landscape transformed by the pandemic.
