CAMBRIDGE, Mass. — Tariffs are among the chief concerns held by hotel asset managers across the U.S.
A recent survey of 80 hotel asset managers by the Hospitality Asset Managers Association found that 50% of respondents said tariffs are among their top three concerns, coming in just behind demand with 60%. Wage increases and Department of Government Efficiency cuts in the federal government tied at 37.5% of respondents.
Those figures, however, may have changed somewhat since the survey was conducted.
“It should be noted that this survey was done before the turmoil from the tariffs happened, so about six weeks ago,” said Chad Sorensen, managing director and CEO of CHMWarnick and president of HAMA, during an April 10 roundtable with HAMA’s board of directors at the association’s spring meeting.
Sorensen added that since the survey was conducted, the number of members who believe the U.S. economy will slip into a recession in 2025 has likely increased based on discussions during the association’s meeting. The spring survey found at the time 48.75% of respondents responded “yes” to a potential recession in 2025, which itself was an increase from only 18.46% of 65 respondents in the fall 2024 survey.
HotelAVE has advised its clients through the pandemic and the high inflationary period to price-shop twice a year to get competitive pricing, said John Paulsen, senior vice president at the asset management firm. Hotel operators also need to raise prices as guests understand that prices everywhere have gone up, he added.
“Look, eggs were $10 a dozen not too long ago,” he said. “They’ve since come down, but you have to take that into consideration, otherwise you’re going to get crushed on your food-and-beverage revenue and you’re not going to be able to make that translate into the bottom line.”
Having something as small as a front-desk resource that has an automated inventory system to track prices should allow hotel teams to price much more dynamically, said Emily Miller, vice president of asset management at Atrium Holding Company.
The way forward is the culmination of several initiatives, Sorensen said.
“It’s evaluating the menu mix,” he said. “It’s not just increasing the prices, but it’s all of the other bits and pieces of it to try to sustain a bottom line where you can see the level of focus on the details of both the revenue generation and the cost control. It’s never been more of a focus.”
Hoteliers should go back and talk to their vendors to negotiate their contracts, Paulsen said. Vendors are obviously going to push back because they, too, have higher costs, but there may be room to change the services provided.
“Do you need everything that you’re getting?” he asked. “Maybe you can reduce some of that, which can in turn reduce some of your costs.”
HotelAVE is looking at everything from a revenue and annual expense perspective, Paulsen said. It was doing profit improvement plans earlier in the first quarter because it anticipated these headwinds before the latest changes with government cuts and tariffs.
“We’re always looking to try to improve that bottom line,” he said.
Miller said the management teams at some hotels have a knowledge gap that likely happened during the pandemic. That’s why her focus has been on educating Atrium's hotel teams.
“They don’t necessarily know where to look,” she said. “We’re training and educating and teaching them all these things that we’ve known and done in the past that they can then apply to their business.”
Hotel leadership teams were so consumed with staffing issues coming out of the pandemic, Sorensen said. Labor availability dropped and wages were rising, and while wages are still a concern, the days of 6%, 8% and 10% increases are done. In the back half of 2024, there was a shift from survival mode to being good managers again.
“You parlay that with inflation being sticky and everything else that’s going on with demand being softer, we quickly ramp that and just day in and day out, focus on where we can find savings and how do we generate additional revenue,” he said.
Overall, heading into 2025, the expected increases in revenue per available room for most U.S. hotel markets were not projected to outstrip expense costs and the consumer price index, Sorensen said.
“It’s complicated, but it’s a different kind of complication than it was a year ago,” he said. “Now the tariff situation is just thrown it into a bit of a tailspin — as much as the indirect impacts of the tariffs versus just the actual direct impacts.”
Clarification: The story was updated to include only sources speaking on the record.