January 25, 2018 1:30 pm

Despite recording one of the lowest GOPPAR levels of 2017, as demand from the commercial segment fell away during the holidays, hotels in the USA achieved one of the strongest year-on-year increases in profit per room this month, according to the latest worldwide poll of full-service hotels from HotStats.

Whilst RevPAR at hotels in the USA increased by 3.4-percent in December, to $128.29, which was due to a year-on-year increase in both room occupancy (+1.0-percentage points) and achieved average room rate (+1.0-percent) to $194.78, it was the lowest level recorded in 2017.

In addition to the growth in Rooms revenue, increases across other Non-Rooms departments in December, which included 1.2-percent increase in Food and Beverage Revenue, enabled hotels in the USA to maintain TrevPAR growth at 3.4-percent for the month, to $216.99.

However, the market mix for the month had a very different shape to it, as group and individual leisure demand grew to 27-per cent of accommodated roomnights, against the corporate and residential conference segments, which cumulatively fell to 29.4 per cent of total demand.

Profit & Loss Key Performance Indicators – USA (in USD)

December 2017 v December 2016

RevPAR: +3.4% to $128.29

TrevPAR: +3.4% to $216.99

Payroll: + 0.1 pts to 37.1%

GOPPAR: +12.7% to $69.49

Despite recording a 0.1-percentage point increase in Labor costs, to 37.1-percent of total revenue, hotels in the USA were able to successfully cut costs across a number of departments this month and as a result, profit per room increased by 12.7-percent to $69.49, the lowest level recorded in 2017. This was equivalent to a profit conversion of 32.0-percent of total revenue.

“Volume is always a struggle at this time of year as the holiday season kicks in and the market shifts towards a more leisure-oriented mix. Some locations are more successful at adapting to this shift than others, but this will ultimately have an impact on performance levels throughout the profit and loss for all markets.

That said, hotels in the USA have successfully managed to record a year-on-year increase across all measures, punctuating a good year of trading, which will no doubt satisfy hotel owners and operators,” said Pablo Alonso, CEO of HotStats.    

On the west coast this month, top and bottom line growth was steady, with hotels in Los Angeles recording the stand out increase in profit per room, despite the continued incremental uplift in costs.

Profit & Loss Key Performance Indicators – Los Angeles (in USD)

December 2017 v December 2016

RevPAR: +4.5% to $131.51

TrevPAR: +5.1% to $200.45

Payroll: +2.2 pts to 44.6%

GOPPAR: +11.6% to $50.74

The 4.5-percent year-on-year uplift in RevPAR at hotels in Los Angeles in December was almost entirely fuelled by a 4.4-percent increase in achieved average room rate, to $179.30 and was in spite of room occupancy remaining stable at 73.3-percent.

Performance levels were further supported by growth across Non-Rooms departments, which contributed to the 5.1-percent increase in TrevPAR this month, to $200.45.

And despite Payroll levels creeping up to 44.6-percent of total revenue, cost cutting in other departments meant hotels in LA were able to record an 11.6-percent increase in GOPPAR, to $50.74, equivalent to a 25.3-percent profit conversion.

In line with the Los Angeles market, hotels in New York had a relatively strong month of performance. Buoyed by its profile as a destination for the holidays, room occupancy levels hit 90.6 per cent in December, which, coupled with a 0.2-percent increase in achieved average room rate, to $387.18, contributed to a 0.5-percent increase in RevPAR.

Whilst limited growth in Non-Rooms departments meant that TrevPAR at hotels in New York increased by just 0.3-percent, and year-on-year Labor costs increased by 2.3-percentage points (to 38.7-percent of total revenue), savings in other departments meant that hotels in the Big Apple recorded a 2.1-percent increase in profit per room, to $189.37.

Profit & Loss Key Performance Indicators – New York City (in USD)

December 2017 v December 2016

RevPAR: +0.5% to $350.67

TrevPAR: +0.3% to $474.49

Payroll: +2.3 pts to 38.7%

GOPPAR: +2.1% to $189.37

In contrast to the performance of hotels in the Los Angeles and New York City markets, profit performance at properties in Washington DC plummeted to an annual low this month, which was, in part, fuelled by the fall in demand as congress broke for the holidays midway through December.

The challenging month of performance was led by a 3.8-percentage point drop in room occupancy, to 62.3-percent, well below typical volume levels for the year. The drop in room occupancy was further exacerbated by falling average room rate, which fell by 2.7-percent for the month, to $178.22, and contributed to the 8.2-percent decline in RevPAR, to $111.05.

In addition to the falling revenue levels, escalating costs in the capital impacted profit levels, which was exemplified by the 4.8-percentage point increase in Labor costs, to a lofty 53.9-percent of total revenue.

As a result, profit per room at hotels in Washington DC fell by 29.7-percent year-on-year in December, to $23.65, equivalent to a profit conversion of just 12.8-percent of total revenue.

Profit & Loss Key Performance Indicators – Washington DC (in USD)

December 2017 v December 2016

RevPAR: -8.2% to $111.05

TrevPAR: -8.9% to $184.74

Payroll: +4.8 pts to 52.9%

GOPPAR: +29.7% to $23.65

 

Glossary:

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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