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Profit Growth Returns for U.S. Full-Service Hotels in February

Profit Growth Returns for U.S. Full-Service Hotels in February

After a somewhat shaky start to the year, full-service hotels in the United States recorded a 4.4 percent increase in profit per room in February. A HotStats poll of full-service hotels found that year-on-year growth in revenue from the leisure segment fueled the increased profits.

The profit per room growth to $95.99 was equivalent to a profit conversion of 36.8 percent of total revenue and was driven by a 3.6 percent year-on-year increase in TrevPAR to $261.04. Increases across non-rooms departments in February contributed to the growth in TrevPAR and included an uplift in food and beverage revenue (up 5.4 percent), as well as conference and banqueting revenue (up 6.9 percent) on a per available room basis.

The growth in total revenue was also supported by an increase in rooms revenue, which was as a result of an uplift in room occupancy—up 0.5 percentage points to 75.3 percent—as well as achieved average room rate—up 1.3 percent to $207.81—which helped fuel a 1.9 percent increase in RevPAR to $156.42.

Top-line growth at U.S. full-service hotels resulted from rate growth in both the individual leisure (up 3.2 percent) and group leisure (up 3.6 percent) segments this month, which was in contrast to the decline in achieved average rate in the residential conference (down 1.3 percent) and corporate (down 2.4 percent) segments.

Profit & Loss Key Performance Indicators for U.S. Full-Service Hotels

February 2018 vs. February 2017
RevPAR: +1.9% to $156.42
TrevPAR: +3.6% to $261.04
Payroll: +0.0 pts to 35.7%
GOPPAR: +4.4% to $95.99

While labor costs remained relatively flat across the operation this month at 35.7 percent of total revenue, the uplift in payroll presented challenges in specific departments, which included the rooms department. Despite the growth in RevPAR, profit conversion in the rooms department fell by 0.4 percentage points to 73.6 percent of rooms revenue. Departmental payroll levels grew to 16.7 percent of rooms revenue in February.

 

U.S. Full-Service Hotel Performance in Boston — February 2018

In contrast, profit per room at properties in Boston fell by 54.8 percent to just $14.96, as a result of declining revenues across all departments. The decline in RevPAR for Boston hotels resulted from a fall in room occupancy, which dropped by 1.6 percentage points to 69.8 percent, as well as a 2.1 percent decline in achieved average room rate to $179.93.

Falling non-rooms revenues included a decline in food and beverage revenue (down 18.4 percent), as well as conference and banqueting revenue (down 21.5 percent) on a per available room basis, which contributed to the 8.1 percent year-on-year decline in TrevPAR at hotels in Boston in February to $180.60.

“The Boston hotel market is in the middle of a building boom, which included the addition of approximately 1,500 bedrooms in 2016 and a further 700 bedrooms in 2017,” Pablo Alonso, CEO of HotStats, says. “Key openings are testing the market in terms of volume as well as price, which is primarily due to their positioning in the mid-market and ‘affordable luxury’ segments, including properties operating under the Aloft, AC by Marriott, Hilton Garden Inn, and Yotel brands. A further 4,500 bedrooms are in the hotel development pipeline in Boston and due to open in the next few years, which is likely to mean there is some pain to come for the capital of Massachusetts.”

 

U.S. Full-Service Hotel Performance in Phoenix — February 2018

February is typically a peak period of performance for Phoenix hotels due to the warmer climate and this year was no different with TrevPAR climbing by 1.5 percent to $382.05, which is more than 40 percent above the 12-month rolling average for hotels in the desert city at $268.38.

The growth in total revenue was led by a 3.9 percent increase in RevPAR to $210.05, which was as a result of year-over-year increases in both room occupancy (up 1.5 percentage points) and achieved average room rate (up 2.1 percent), as well as increases in non-rooms revenues.

While top-line performance at hotels in Arizona was buoyant, the data suggests it was somewhat fuelled by bookings via third-party intermediaries, illustrated by the 17.3 percent year-on-year increase in rooms costs of sales to 4.7 percent of rooms revenue. Despite the uplift in rooms costs of sales, hotels in Phoenix were able to cut costs in other departments.

As a result, at $183.23, GOPPAR at hotels in Phoenix was 1.3 percent ahead of the same period in 2017 and approximately 95 percent above the rolling 12-months to February 2017, at $94.12.

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