Waning revenues and rising costs have conspired to hobble profit per room at hotels in…
May 29, 2018 3:00 pm
Total Revenue levels at hotels in the USA hit a high of almost $290 per available room in April as strong, year-on-year revenue increases were recorded across all operating departments, according to the latest worldwide poll of full-service hotels from HotStats.
The TrevPAR measure encompasses the revenue generated across all operating departments at hotels in the USA, which this month was led by a 5.6-percent year-on-year increase in revenue in the Rooms department, as well as growth in Non-Rooms revenues, including Food & Beverage (+8.4-percent) and Conference & Banqueting (+11.6-percent) on a per available room basis.
The growth across all revenue centers fuelled a 6.5-percent year-on-year increase in TrevPAR, which hit a post-GFC high of $287.53 per available room in April and meant revenue levels edged past the $285.87 achieved in this measure last month.
Whilst growth in RevPAR included a 0.2-percentage point year-on-year increase in room occupancy, to a robust 82.0-percent, it was led by the 4.6-percent increase in achieved average room rate, which was recorded at $218.78 this month, just short of the peak in this measure in March.
In addition to the growth in revenue, hotels in the USA were further buoyed by an increasingly uncommon decline in Labor costs, which fell by 0.4-percentage points to 32.1-percent of total revenue.
Profit & Loss Key Performance Indicators – USA (in USD)
April 2018 v April 2017
RevPAR: +5.6% to $179.32
TrevPAR: +6.5% to $287.53
Payroll: 0.4 pts to 32.1%
GOPPAR: +9.1% to $120.02
Flow Through +56.8%
As a result of the movement in revenue and costs, profit per room at hotels in the USA grew by 9.1-percent year-on-year in April, to $120.02, which was only just behind the previous high of $121.56 recorded in October 2017.
Additionally, the cost savings enabled hotels in the USA to record a profit flow through of 56.8-percent this month, highlighting the ability of hoteliers to drive profit levels during periods of positive performance.
The profit per room increase this month helped to shore up the year-to-date growth in bottom line performance at hotels in the USA, which was recorded at +3.9-percent for the four months to April 2018, to $102.39.
“April marked another month of positive trading for hotels in the USA. It’s very pleasing to see the high levels of conversion being achieved at a very punchy 41.7-percent of total revenue this month
Particularly notable is the healthy level of flow through where the less profitable non-rooms generating departments led the revenue growth,” said Pablo Alonso, CEO of HotStats.
For hotels in San Francisco, the buoyant performance in April provided some respite from a fairly mixed period of trading since the beginning of the year.
Hotels in San Francisco posted an 18.9-percent year-on-year increase in TrevPAR in April, to $348.84, which was fuelled by the week-long RSA security conference, which took place at the Moscone Center and helped boost demand for hotel accommodation across the city.
The annual conference welcomed more than 42,000 attendees in 2018, with 550-expert-led sessions and more than 650 exhibitors.
As a result, whilst occupancy levels broadly remained stable at 88.4-percent, hotels in San Francisco were able to leverage price to record a 16.3-percent year-on-year increase in achieved average room rate, to $283.34, which fuelled the 16.1-percent increase in RevPAR, to $250.50.
The rate growth was led by a 27.0-percent year-on-year increase in the Best Available Rate category, which soared by almost $70 to $314.29 and was by far the highest sector rate recorded at hotels in the city this month. Additionally, increases were also recorded in rate in the Conference (+5.7-percent), Corporate (+7.8-percent) and Leisure (+22.5-percent) segments.
Whilst it was a strong month of trading, hotels in San Francisco may have left some cash on the table as the data suggests that a significant proportion of roomnights were booked through third party intermediaries. This was evidenced by the 35.3-percent year-on-year increase in Rooms Cost of Sales (ie the HotStats measure of Travel Agents’ Commissions, Reservation Fees, GDS Fees, Third Party Fees and Internet Booking Fees), to $13.52 per available room, equivalent to 5.4-percent of Rooms Revenue.
Aside from this, it was a positive month for hotels in San Francisco as the weight of attendees to the RSA conference also fuelled the appetite for ancillary facilities, which meant growth was successfully recorded in Non-Rooms revenues, including Food & Beverage (+29.9-percent) and Conference & Banqueting (+36.5-percent) on a per available room basis.
Profit & Loss Key Performance Indicators – San Francisco (in USD)
April 2018 v April 2017
RevPAR: +16.1% to $250.50
TrevPAR: +18.9% to $348.84
Payroll: -3.7 pts to 39.1%
GOPPAR: +35.0% to $133.55
Flow Through: 62.6%
Furthermore, the weight of revenue growth enabled hotels in San Francisco to record a saving in Labor costs, which fell by 3.7-percentage points to 39.1-percent of total revenue and contributed to the 35.0-percent year-on-year increase in profit per room in April, to $133.55.
Further down the Pacific coastline, whilst hotels in San Diego also recorded a positive month of trading, it was well behind the year-on-year growth in San Francisco.
The 3.1-percent increase in TrevPAR, to $309.29, continued the mixed performance in San Diego since the beginning of 2018.
“Despite a 1.0-percent increase in profit per room for the month, to $143.78, flow through was recorded at just 16.1-percent, way below the industry average expectation of 50% flow, which continues to highlight the challenges operators are facing with tightening profit margins in a period of increasing operating costs.” Added Pablo.
Profit & Loss Key Performance Indicators – San Diego (in USD)
April 2018 v April 2017
RevPAR: +2.6% to $197.82
TrevPAR: +3.1% to $309.29
Payroll: +1.5 pts to 28.5%
GOPPAR: +1.0% to $143.78
Flow Through: 16.1%
Occupancy (%) – Is that proportion of the bedrooms available during the period which are occupied during the period.
Average Room Rate (ARR) – Is the total bedroom revenue for the period divided by the total bedrooms occupied during the period.
Room Revpar (RevPAR) – Is the total bedroom revenue for the period divided by the total available rooms during the period.
Total Revpar (TRevPAR) – Is the combined total of all revenues divided by the total available rooms during the period.
Payroll % – Is the payroll for all hotels in the sample as a percentage of total revenue.
GOP PAR – Is the Total Gross Operating Profit for the period divided by the total available rooms during the period.
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