Report: Profit Grew in December for U.S. Hotels

NATIONAL REPORT—U.S. hotels continue to make money. Year-over-year GOPPAR growth of 1.5% in December contributed to a 3.4% 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% in 2016 and 3.0% in 2017.

December GOPPAR of $71.41 was the lowest level for the year and 37.1% lower than 2018’s total of $97.87. Still, revenue centers were up across the board, including rooms (up 2.4%), food and beverage (up 3.3%) and conference/banqueting (up 5.1%), on a per-available-room basis.

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

Despite the increases, profit levels were impacted by rising costs, including a 1.1%-point increase in labor to 38.2%, as well as a 0.7%-point increase in overheads, which grew to 25.4% 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% of total revenue, which is below the YTD figure of 37.8%.

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

December 2018 v. December 2017

RevPAR: +2% 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% points YOY to 65.6%, which was the lowest volume level for the year.

However, a 2% increase in RevPAR was abetted by a 3% 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,” said David Eisen, director of hotel intelligence & customer solutions at HotStats“Owners and operators hope the positive performance in 2018 will carry through 2019, despite macro concerns and worries over expenses.”

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

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

RevPAR growth was driven by the increase in demand for accommodation as the city hosted a number of major conferences, including 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% points to 33.6% 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% in December to $151.98, which was in spite of a 0.8%-point YOY decline in room occupancy, which fell to 73.8%.

However, RevPAR growth was wiped out by falling non-rooms revenues, which included an 11.4% decline in food and beverage, as well as a 16.1% drop in conference/banqueting, on a per-available-room basis. The mix contributed to a 0.9% decline in TRevPAR for the month to $221.21.

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