European hotel gross operating profit margins held at 36.5% in full-year 2025, essentially flat versus 2024 and ending a multi-year expansion cycle, according to benchmarking data from HotStats.

The flatline masks a sharper problem underneath. Flow-through — the share of incremental revenue converting into incremental profit — has fallen to just 35%, down from the levels that powered the post-pandemic profit surge. Both total revenue per available room (TRevPAR) and GOPPAR grew by roughly 3% year-on-year across Europe, but that growth barely moved the profit needle.

"Hotels that succeed in this environment will be the ones that understand profit at a granular level," said Michael Grove, CEO of HotStats. "That means knowing exactly where revenue is generated, where costs are rising and where action will have the greatest impact."

Where is the growth concentrated?

The 3% aggregate figure hides a deep regional split. Eastern Europe remains the continent's strongest performer, with TRevPAR up 6.5% and GOPPAR up 10.4% year-on-year. Southern Europe posts more moderate gains:

• TRevPAR up 4.6%
• GOPPAR up 5.7%

That pattern points to a region that has moved from recovery into normalization.

Western and Northern Europe show clear strain. Western Europe's TRevPAR grew 2.2%, with GOPPAR matching at 2.2%. Northern Europe lagged further: TRevPAR up just 1.4% and GOPPAR up a marginal 0.2%. Western Europe also posted the lowest GOP margin in the dataset, at 33.3%, still below pre-pandemic levels.

Why have margins stopped expanding?

Southern Europe remains the regional margin leader, with GOP margins approaching 41% and holding around 40% since 2023, slightly above pre-pandemic levels. Eastern Europe improves off a lower base. Western and Northern Europe absorb the bulk of cost inflation without the revenue cushion to compensate.

The operational implication: tracking RevPAR alone no longer captures the full revenue picture. TRevPAR — which incorporates F&B, wellness, parking and other ancillary lines — has become the more meaningful indicator of overall property performance.

What is happening to ancillary revenue?

Ancillary streams now carry more of the load as room revenue moderates. Wellness stands out: spa treatment revenue rose 4.7% and membership fee revenue rose 6%, reaching roughly €10–€11 per occupied room.

Food and beverage performance splits. Outlet and catering food revenues show modest growth, while beverage revenues stay under pressure — a pattern pointing to targeted activation rather than broad price increases. Parking and attrition fees continue to climb.

Where are cost pressures hitting hardest?

Labor remains the single largest pressure point on profitability. Total payroll per available room rose nearly 5% year-on-year, with increases spreading across Rooms, F&B and Sales & Marketing. HotStats labels this structural rather than cyclical.

Pressure continues deeper into the P&L. Credit card commissions now average €3 per available room, up from €2.3 pre-pandemic. Sales & Marketing spend holds at €2.3 PAR as operators chase incremental demand. Rising loyalty programme costs, driven by increased points issuance and promotions, keep eating into margins.

What comes next?

HotStats, now part of Duetto, frames the next phase as an optimisation cycle rather than a demand cycle. Aggregate European GOP margins reached their high point in 2024 at just under 37%; the 2025 figure remains strong but flat.

The next HotStats monthly benchmark release will test whether 2026 margins break from or confirm the current plateau, with investors watching flow-through above all other metrics.