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U.S. Hotels Secure Third Consecutive Year of Profit Growth

Good news: U.S. hotels continue to make money. Year-over-year GOPPAR growth of 1.5 percent in December contributed to a 3.4-percent annual increase in profit for hotels in the U.S., according to data from HotStats tracking full-service hotels. It was the third consecutive year of GOPPAR growth, following YOY increases of 3.7 percent in 2016 and 3.0 percent in 2017.

December GOPPAR of $71.41 was the lowest level for the year and 37.1-percent lower than 2018’s total of $97.87. Still, revenue centers were up across the board, including Rooms (up 2.4 percent), Food & Beverage (up 3.3 percent) and Conference & Banqueting (up 5.1 percent), on a per-available-room basis.

As a result of the movement in revenues, TRevPAR growth for the month was recorded at 2.6 percent YOY at $225.56, which was approximately $33.50 below the full-year figure of $259.10, a 2.9-percent increase over the year prior.

Despite the increases, profit levels were impacted by rising costs, including a 1.1-percentage-point increase in labor to 38.2 percent, as well as a 0.7-percentage-point increase in overheads, which grew to 25.4 percent for the month.

The movement in revenue and costs meant profit conversion at hotels in the U.S. in December was recorded at 31.7 percent of total revenue, which is below the YTD figure of 37.8 percent.

Profit & Loss Key Performance Indicators – U.S. (in USD)

December 2018 v. December 2017
RevPAR: +2.0% to $132.26
TRevPAR: +2.6% to $225.56
Payroll: +1.1 pts. to 38.2%
GOPPAR: +1.5% to $71.41

Following the trend of 2018, room occupancy levels remained challenged in December and fell by 0.7 percentage points YOY to 65.6 percent, which was the lowest volume level for the year.

However, a 2.0-percent increase in RevPAR was abetted by a 3.0-percent increase in achieved average room rate, which grew to $201.64 for the month and marked the 12th consecutive monthly increase in this measure.

Through challenging economic conditions and political instability, the U.S. hotel industry has once again demonstrated its resilience. Owners and operators hope the positive performance in 2018 will carry through 2019, despite macro concerns and worries over expenses.
David Eisen, Director of Hotel Intelligence, Americas, HotStats

Hotels in San Diego were amongst the best performing in December, recording a 41.8-percent YOY increase in profit per room, which hit $86.44 for the month. The growth contributed to the 5.8-percent YOY increase for the year, which grew to $144.52.

The increase in profit at hotels in the city was driven by a massive 26.5-percent YOY increase in RevPAR to $137.02, as room occupancy soared by 5.7 percentage points to 75.7 percent, coupled with a 16.9-percent increase in achieved average room rate to $180.95.

RevPAR growth was driven by the significant increase in demand for accommodation as the city hosted a number of major conferences, including key events at the San Diego Convention Center; namely, the ASH Annual Meeting and Exposition on haematology, a four-day event attracting more than 27,000 delegates.

At the same time, labor expense declined 2.8 percentage points to 33.6 percent of total revenue in December, helping contribute to YOY growth in GOPPAR to $144.52 in 2018 from $136.58 in 2017.

Profit & Loss Key Performance Indicators – San Diego (in USD)

December 2018 v. December 2017
RevPAR: +26.5% to $137.02
TRevPAR: +24.7% to $234.49
Payroll: -2.8 pts. to 33.6%
GOPPAR: +41.8% to $86.44

San Diego’s growth contrasted to Philadelphia declines for the month—and the year—as profit levels tumbled, impacted by falling non-rooms revenues and rising costs.

On a positive note, RevPAR at hotels in Philadelphia increased by 3.2 percent in December to $151.98, which was in spite of a 0.8-percentage-point YOY decline in room occupancy, which fell to 73.8 percent.

However, RevPAR growth was wiped out by falling non-rooms revenues, which included an 11.4-percent decline in F&B, as well as a 16.1-percent drop in Conference & Banqueting, on a per-available-room basis. The mix contributed to a 0.9-percent decline in TRevPAR for the month to $221.21.

In addition to the decline in revenue, rising costs, which included a 5.6-percentage-point increase in labor, to 38.4 percent of total revenue, contributed to profit per room recorded at $67.49 in the month, more than 45 percent below the YTD figure of $97.56.

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

December 2018 v. December 2017
RevPAR: +3.2% to $151.98
TRevPAR: -0.9% to $221.21
Payroll: +5.6 pts. to 38.4%
GOPPAR: -17.0% to $67.49

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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.

United States

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