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U.S. Profit Growth Accelerates at Fastest Pace Since Summer 2018

Profit growth hit a crescendo in the U.S. in February, as hotels recorded a 7.2-percent year-over-year increase in GOPPAR, according to the latest data tracking full-service hotels from HotStats.

The increase was the largest YOY jump since June 2018, when GOPPAR rose 8.5 percent.

RevPAR for the month was up 4 percent YOY and included a 4.3-percent jump in average room rate to $217.67.

Profit growth this month was driven by an uplift in revenue across all departments, including a 4.0-percent increase in RevPAR to $163.65, as well as a 3.1-percent increase in non-rooms revenue, which grew to $109.30 on a per-available-room basis and was equivalent to 40 percent of total revenue.

The uplift in ancillary revenues included a YOY increase in Food & Beverage, which was up 3.0 percent on a per-available-room basis, and contributed to the 3.6-percent growth in TRevPAR for the month to $272.95.

Cost savings also contributed to profit growth. Labor costs, for one, which actually declined 0.5 percentage points in the month as a percentage of total revenue, even as they rose 2.3 YOY on a per-available-room basis.

Profit conversion was recorded at 38.2 percent of total revenue, which is slightly above the rolling 12-month average at 37.8 percent of total revenue.

Profit & Loss Key Performance Indicators – U.S. (in USD)
February 2019 v. February 2018
RevPAR: +4.0% to $163.65
TRevPAR: +3.6% to $272.95
Payroll %: -0.5 pts. to 35.0%
GOPPAR: +7.2% to $104.32

“February marked the third consecutive month of profit growth, and sixth in the past seven, showing the resiliency of the hotel industry even in the face of slowing top-line growth that has closely followed a stagnating U.S. economy,” said David Eisen, Director of Hotel Intelligence & Customer Solutions, Americas, HotStats.

Not surprising, Atlanta GOPPAR popped in the month, recording an 85.6-percent YOY increase, as the city hosted Super Bowl LIII. ARR in the city clocked in at $273.08, almost $90 higher than what was achieved at the same time last year, while room occupancy rose 3.1 percentage points to 81.1 percent. The combination led to a 52.2-percent YOY rise in RevPAR to $221.53.

TRevPAR increased by 39.8 percent to $339.78, an increase of almost $100 on the same period in 2018, and 50 percent above the TRevPAR recorded at properties in the city in the rolling 12 months to February 2019.

Cost savings included a 5.9-percentage-point decrease in payroll as a percentage of total revenue to 24.3 percent.

Profit & Loss Key Performance Indicators – Atlanta (in USD)
February 2019 v. February 2018
RevPAR: +52.2% to $221.53
TRevPAR: +39.8% to $339.78
Payroll %: -5.9 pts. to 24.3%
GOPPAR: +85.6% to $166.16

In contrast, Chicago’s hotels took it on the chin in February, as extreme frigid weather scored a knockout on GOPPAR, which was down 74.9 percent YOY. As disappointing as February was, it was an improvement on January, when the cold weather was at its apogee, sinking GOPPAR levels.

In addition to the 2.7-percent drop in RevPAR in February, declines were also suffered in non-rooms revenue, including Food & Beverage, down 7.0 percent on a per-available-room basis, which contributed to the 4.0-percent decline in TRevPAR to $143.28.

Falling revenue levels were further exacerbated by rising costs, which included a 1.7-percentage-point increase in payroll as a percentage of total revenue to 64.1 percent.

As a result of the movement in revenue and costs, profit conversion at hotels in Chicago was recorded at just 1.1 percent in February.

Profit & Loss Key Performance Indicators – Chicago (in USD)
February 2019 v. February 2018
RevPAR: -2.7% to $85.84
TRevPAR: -4.0% to $143.28
Payroll %: +1.7 pts. to 64.1%
 GOPPAR: -74.9% to $1.62

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Editor’s Notes:

The hotels profiled in this report are drawn from the HotStats database and reflect the portfolios and distribution of the hotel chains that we survey and which operate in the full-service sector.

Please note: The data samples are reviewed and rebased each year to reflect the changes in the HotStats survey base. As a result, performance ratios published last year may differ from those contained within this report.

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.

GOPPAR - Is the Total Gross Operating Profit for the period divided by the total available rooms during the period.

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