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Tourism is booming, hotel room prices have skyrocketed, occupancy rates have increased – but the owners still can't be satisfied with declining profits and increasing burdens
Tourism in Europe is at record levels, room rates are rising, and occupancy and RevPAR are also increasing in many markets. At first glance, all this seems like a success story. However, the owner's profit does not always follow the growth in revenue: labor, energy, operation, brand and operator fees can increase faster than the amount of money that can be collected from guests. One of the most important hotel questions in the coming period will therefore no longer be how many rooms have been sold and at what price, but how much of the revenue is retained.
There are a few well-known thermometers of hotel industry performance: occupancy, average room rate, RevPAR. If all three are pointing up, it would be difficult to say at first glance that there is something wrong. But by the second half of 2026, two stories will increasingly diverge in Europe. One is about guests and revenue, and the other is about how much that same revenue costs the hotel. And the two are no longer necessarily heading in the same direction.
The guest is still coming, Europe is breaking records – but growth is nowhere near as strong as it seems
Overall, there are still no major problems with the demand side of European tourism. According todata published by Eurostat on September 1 , 1.321 billion guest nights were registered in tourist accommodation establishments in the European Union in the first half of 2026, 1.7 percent more than a year earlier. However, the growth was very unevenly distributed: while Ireland, Malta and Slovakia experienced spectacular growth, nine EU countries have already shown a decline.
A few days ago, we presented in detail on szalloda.blog what is behind the European record: the growth is driven by a few strong markets, while trips are getting shorter, guests' budgets are tightening, and the same occupancy rate can mean more work and costs. Our previous analysis: European tourism sets a record – meanwhile, nine countries are already in the red .
But now it's worth going one level lower. The story doesn't end where guest nights, occupancy, or room rates increase. That's where it really starts to get interesting from the owner's perspective.
The first half of the year looked great – but the momentum may run out by the second half of the year
According to CBRE’s 2026 Half-Year European Hotel Market Analysis, European RevPAR – the revenue per available room – increased by 4.5 percent year-on-year through the end of June. A significant portion of this was driven by a 3.2 percent increase in ADR, while occupancy also improved somewhat. This is still a particularly strong first half performance, especially compared to the fact that CBRE had predicted full-year European RevPAR growth of only 1-3 percent at the start of the year.
However, the latest STR–Tourism Economics forecast already shows why it is not worth drawing a straight line from the first half-year figure to the end of the year. The forecast, published on August 31, expects a European RevPAR increase of only 1.2 percent for the whole of 2026 , of which 0.8 percent can be provided by the increase in ADR. For 2027, the forecast already includes a RevPAR decrease of 0.1 percent.
Even more telling is occupancy. Of the 31 European markets surveyed, fourteen are already expected to decline in 2027, while twelve of the remaining seventeen are expected to grow by less than 1 percent. The spectacular growth phase of the post-Covid recovery is therefore coming to an end, while the opposite trend is evident on the cost side.
RevPAR increases and room rates rise – but that doesn't mean that there will be any more profit left.
Here comes the misunderstanding that the hotel industry has been prone to for decades. Occupancy shows how many rooms we sold. ADR shows at what price on average. RevPAR shows how much room revenue was generated per available room. These are all important metrics, but none of them are profit indicators.
A hotel's RevPAR can increase even though personnel costs increase faster, energy costs increase, maintenance and insurance costs increase, technology costs increase, brand and operator fees increase, and guest acquisition becomes increasingly expensive. In the end, what matters in the income statement is not how much money came in at the top, but how much was left at the bottom.
According to CBRE’s analysis , this is precisely what will become one of the most important European issues in the second half of 2026: rising labor costs, utility expenses, brand and operator fees together put increasing pressure on gross operating profit margins. In the post-Covid period, RevPAR grew comfortably faster than costs; this advantage has now largely disappeared.
Revenue is barely growing, labor costs are rising by 4–6 percent – the gap is widening
HotStats’ European analysis further illustrates the problem. Several major European markets are seeing annual labor cost increases of 4-6 percent , outpacing revenue growth. This is directly resulting in slowing GOPPAR and shrinking operating margins.
This is especially important because in a hotel's cost structure, labor is not a small line at the bottom of the table. A hotel is fundamentally a labor-intensive business: without reception, housekeeping, kitchen, restaurant, shifts, sales, administration, wellness and management, the service simply does not work.
A few years ago, many hotels were able to absorb inflation by significantly increasing their prices. If the guest accepted a 10–15 percent higher room rate, that left room for more expensive labor, energy, and raw materials. However, if the ADR can only be increased by 1–3 percent, while one of the key cost groups increases by 4–6 percent, the same math no longer works.
British hotels are already showing what happens when costs grow faster than revenue
The UK is currently one of the clearest examples of this in Europe. According to HotStats’ analysis of P&L data from nearly 1,000 UK hotels , revenue has essentially stagnated while labour costs have risen by more than 4%. Profitability has fallen by around 4% as a result.
Detailed HotStats data for the first quarter of 2026 shows the same thing from a different perspective: UK TRevPAR growth has failed to keep pace with rising labor costs.
In other words, it's not that guests have disappeared or room rates have collapsed. Revenue simply hasn't grown fast enough to cover the increased cost of operations. This difference runs throughout the hotel. The restaurant may be full, room occupancy may be high, and sales may be near record levels; if the margins of individual business lines deteriorate, the owners feel less and less of this.
Budapest is soaring, Hungarian RevPAR is growing – but the strong forint and rising labor costs paint a completely different picture
Hungary is a particularly interesting market in this respect. Budapest showed particularly strong hotel performance in the first half of 2026. According to the PPHE Hotel Group's half-year report , citing data from the STR European Hotel Review, Budapest's RevPAR rose by 15.3 percent to €89.89 . ADR increased by 12.9 percent to €131.07, and occupancy reached 68.6 percent.
The Hungarian Hospitality and Tourism Authority (MSZÉSZ) reported favorable figures nationwide in July. According to the July 2026 Trend Report , room capacity utilization was 67.6 percent, three percentage points higher than a year earlier. Gross RevPAR increased to HUF 29,908, up 3.7 percent , while total gross hotel revenue increased by 7.5 percent.
These are very good numbers at first glance. However, in the case of Hungary, there is another variable that can easily distort the European comparison: the exchange rate of the forint .
The growth may appear much greater in euros than in forints – the exchange rate could significantly rewrite the success story
The July trend report of the MSZÉSZ specifically notes that in July 2026 the forint was approximately 10 percent stronger against the euro than in July 2025. This means that the same hotel revenue reported in forint may show a significantly more spectacular increase when converted to euros.
A national RevPAR that increases by 3.7 percent in forints could show an increase of around 15 percent in euros in such an exchange rate environment. However, this has not yet resulted in the hotel generating 15 percent more forint revenue, while wages, cleaning, maintenance, local services and many other operating items are still typically reported in forints.
On the other hand, a stronger forint makes the same room rate in forint more expensive for foreign guests. We wrote about this in detail in our analysis Strong forint, weak summer – who will survive the 2026 Hungarian tourism season?. According to data from the Hungarian National Bank, between March 23 and June 17, 2026, the official exchange rate of the euro changed from 394.68 forints to 349.61 forints. A room priced at 60,000 forints thus became more expensive for foreign guests from around 152 euros to more than 171 euros without the hotel raising its price by a single forint.
The 15.3 percent first-half Budapest STR data, the July MSZÉSZ data and the exchange rate effect were not prepared for the same period and with the same methodology, so they cannot be simply derived from each other. However, they are excellent for showing that the exchange rate effect simply cannot be ignored when assessing Hungary's hotel performance in euros in 2026.
This is where the cost side comes in. According to Eurostat's first quarter 2026 labor cost data, hourly wage costs in Hungary rose the fastest in the entire EU: 16.4 percent compared to the same period the previous year. This data applies to the entire economy, not just the hotel industry, and therefore cannot be automatically applied to all Hungarian hotels. However, it clearly indicates the magnitude of the operating environment.
The Hungarian question is therefore particularly exciting: if RevPAR in euros increases spectacularly, how much of this is real demand and pricing performance, how much is the exchange rate effect, and ultimately how much is left after rapidly increasing operating costs?
Occupancy and revenue statistics alone do not provide the answer to this.
Everyone celebrates RevPAR – but ultimately the owner is interested in GOPPAR and the money left in the coffers
This is what GOPPAR , or Gross Operating Profit Per Available Room, is used for, among other things. It is not a perfect indicator and is not the same as the owner's final net profit, but it brings us much closer to the question of how much profit a hotel's operation actually generates.
Equally important is TRevPAR , or total revenue per available room, which takes into account not only the room, but also F&B, wellness, event and other revenues.
RevPAR shows how efficiently we generate room revenue. TRevPAR shows how much total revenue the property generates. GOPPAR shows how much of that operating profit is retained. And then there are the items that further shape the owner's return: financing, investment, depreciation, taxes and other owner costs.
So RevPAR is not a bad metric. You just shouldn't ask it something it can't answer.
The solution is not necessarily another layoff – but a much more efficient hotel
The simplest answer to cost pressures is always the same: reduce staff. However, in the hotel industry, this can easily lead to a dangerous spiral. With less housekeeping, room preparation deteriorates, with fewer servers, service slows down, an overloaded reception loses its personal touch, and with a lack of maintenance, the product itself slowly begins to degrade.
CBRE's analysis therefore does not simply call for cost reduction, but for total revenue management and higher operational efficiency . This is a significant difference. The question is not where to get one more person out of the position, but when is full staffing really needed, where can administration be automated, which F&B services generate real profit, how much does it cost to acquire a reservation through which distribution channel, how much does upselling bring, how can energy consumption be optimized, and which services will generate real guest value.
We previously wrote about the relationship between operations and technology in the szalloda.blog article Artificial intelligence won't take away hotel jobs, but it will take away poorly organized work : the real value of technology is not simply in replacing people, but in reducing unnecessary work, poor coordination, and late reactions.
This is a much more difficult managerial task than simply raising prices or cutting staff. However, it is likely to be one of the most important competitive advantages of the next hotel era.
Record occupancy, record revenue, record room rates – there's only one question left: how much money will be left at the end?
Tourism communication loves records. More guests, more guest nights, higher revenue, higher ADR, rising RevPAR. These are all important results, but none of them replaces the profit and loss statement.
A revenue of 100 million forints is not better than a revenue of 90 million forints if three million were retained from the first and eight million from the second. Just as an occupancy rate of 80 percent is not necessarily better than 75 percent if the last five percent of guests were acquired at a price and expense that barely generates a profit.
In the case of Hungary, an additional question must be added: in what currency do we view the record? Hotel performance indicators reported in forints and euros may give a significantly different picture of the same operation in 2026.
The hotel industry is therefore slowly returning to the fundamental question that post-Covid price increases have pushed into the background for a few years: the point is not how much revenue we can generate, but how much of it we can keep without compromising the guest experience, product quality, and employee performance.
A full house is still good news. It's just that from now on it's worth opening the income statement afterwards.
Sources:
The legal, regulatory, industry and international information used in this article reflects the status as of September 7, 2026, and we also used artificial intelligence (ChatGPT, Claude) to collect, compare and organize it; the final editing, interpretation and conclusions reflect the editorial position of szalloda.blog . We also used AI-based applications to create some of the illustrations and infographics for this article.The original post was published in Hungarian; the English version was generated automatically using AI.
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