The Rising Cost of Hotels

Earlier this week, I hosted an HRS Stay, Work & Pay Webinar: Navigating the Future of Corporate Travel, Trends & Strategies for 2025.? Attended by travel managers, procurement leaders, CFOs, and even a few curious journalists, the session was based on recent HRS research from the 2025 Market Insights Report.? On stage with Neil Hammond from GoldSpring Consulting , we covered everything from rising hotel costs to evolving corporate travel patterns—and let me tell you, the numbers we shared raised more than a few eyebrows.

Business travel is changing, but one thing remains consistent: companies are spending more on hotels than ever before. If you think rising airfare is the biggest challenge for travel budgets, think again—hotels are taking a larger share of corporate travel spend every year.

A recent survey by Business Travel News revealed that 68% of travel managers anticipate their organizations' hotel rates to increase in 2025, suggesting that hotel costs are outpacing other travel-related expenses.? Here is recently released YOY data from BTN on ten US gateway cities:

By the Numbers: How Much Are Companies Really Spending?

Let’s talk data.? According to the Global Business Travel Association (GBTA), the corporate lodging market continues to grow, surpassing 2019 pre-pandemic levels with nearly $1.5 trillion in business travel.?

What’s even more surprising is how hotel is becoming a bigger percentage of overall corporate travel spend. In the past, airfare was the dominant cost driver. But today, hotel rates are rising faster than any other category.?

The HRS data presented during the Webinar (from the 2025 HRS Market Insights Report) and hotel publicly available data from above shows:??

• Average Daily Rate (ADR) is up across all major markets.
• Revenue Per Available Room (RevPAR) has increased by 2.8% to 6% in 2024, depending on the hotel chain.
• Forecasts for 2025 predict ADR will rise another 3% globally, with emerging markets seeing up to 4.5% increases.

Additionally, The Wall Street Journal’s data goes further in suggesting revenue per available room (RevPAR) for group travel increased by 6.8% in the first eight months of 2024 compared to the same period in 2023. This surge in group travel spending indicates that companies are allocating more funds to lodging, further elevating hotel expenses as a proportion of total travel spend.

For companies trying to control travel costs, this is a major challenge.        

Our data shows that in 2025, we expect ADR’s in the US to increase 2.5% and in Europe 1.5-3.5%.? See the illustration below.? This trend is further supported by findings from Skift, which reported that business travel spending is expected to rise steadily through 2025, with hotel room rates projected to increase by 2.6% globally in 2025. This steady climb in lodging costs underscores the growing financial burden on corporate travel budgets.

The Hidden Problem: Unmanaged Spend

Here’s where it gets even more interesting. According to the same market report cited above from GBTA and illustrated by HRS Group below, a significant amount of corporate hotel spend is completely unmanaged.

• 70% of meeting-related hotel spend is unmanaged—meaning companies have no visibility or control over how much they’re paying.
• 90% of workforce travel (contractors, field teams, project workers) is unmanaged, leading to inefficiencies and unnecessary overspending.
• Even in traditional transient travel, 40% of hotel spend falls outside managed programs.

What does this mean? It means employees are booking hotels through consumer sites, overpaying, and submitting painful expense reports later.?????????????????????? ?????????????????????????????????

Final Thought: The Hotel Bill Isn’t Getting Any Cheaper

If your company isn’t actively managing its hotel spend, you’re overpaying—plain and simple. With hotel prices rising and lodging taking a bigger share of the corporate travel budget, businesses must get ahead of the curve. If your hotel program still relies on outdated RFPs, manual payments, and expense reports, it’s time for an upgrade.

But here’s the good news from all this painful talk of cost increases: from the biggest challenges come the biggest opportunities.

“Evolving metrics show buyers where the savings can be found. Hotels clearly present the biggest opportunity to secure savings for corporate travel programs." - Neil Hammond on the HRS Webinar February 22, 2025

Want to learn more about how HRS can help leverage your own program’s data to deliver newfound savings? Let’s talk. Drop me a message, and I’ll show you how to make your hotel program smarter, cheaper, and easier.