HotStats: Fragile U.S. Hotel Industry Records Performance Gains in May

Minneapolis - St. Paul - Twin Cities
Minneapolis

LONDON — In the United States, between April and May 2020, total revenue per available room (TRevPAR) was up 39 percent (down 92 percent year-over-year) and gross operating profit per available room (GOPPAR) was up 32 percent to -$17.25 (down 116.2 percent YOY), according to the latest HotStats report.

The uptrend is a sign that April may have been the bottom and absent a surge in cases, the expectation is that month-over-month (MOM) numbers will continue to improve, especially as more states reopen, allowing for non-essential travel to commence with guidelines for hotels and other businesses.

Occupancy and room rate in May remained well off 2019 levels, but did climb four percentage points and 5 percent, respectively, from April, helped out in some way by Memorial Day Weekend travel, which, while much lower than the 43 million Americans who took a trip last year, according to AAA, was an added boost. May RevPAR of $13.76 (down 92.2 percent YOY) was up 54 percent from April and down 79 percent from RevPAR of $66.27 in March—the first month that COVID-19 impact showed up in hotel industry performance numbers.

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Further and expected YOY expense drops showed up in the data, as many hotels remained closed or operated at limited capacity. Labor costs on a per-available-room basis were down 74.4 percent YOY, while utility costs were down 45 percent YOY. Anecdotally, the expectation is that water bills will rise due to increased laundry operations and additional and more frequent washing of things like linens due to cleaning protocols. One hotelier told HotStats that his water bill was already up 33 percent.

Profit margin was -87.3 percent of total revenue, up 93 percentage points from April, but down 125 percentage points from the same time a year ago.

Profit & Loss Performance Indicators — United States

Key Performance Indicator

May 2020 vs. May 2019

YTD 2020 vs. YTD 2019

RevPAR

92.2% to $13.76

-53.3% to $80.41

TRevPAR

-92.9% to $20.21

-52.2% to $131.08

Payroll PAR

-74.4% to $25.41

-33.2% to $64.80

GOPPAR

-116.2% to -$17.65

-78.2% to $22.38

Minneapolis Hotel Performance — May 2020

Minneapolis, like many cities across the United States, was the scene of demonstrations and protests that followed the death of George Floyd at an officer’s hands on May 25. The extent to which the event impacted travel is hard to decipher since it came amid the COVID-19 pandemic.

Hotel occupancy in the city was still depressed in May 2020, but up 2.3 percentage points over April and complemented by an $8 uptick in average rate, according to HotStats. RevPAR was also slightly up but still down 95 percent YOY. The absence in room revenue and ancillary revenue weakened TRevPAR, which, while up 52 percent in May over April, is still down 95.3 percent YOY.

Expenses in May remained down on a YOY basis, including labor costs (down 80.1 percent YOY) and total overheads (down 67.5 percent YOY). The continued decrease in costs is still not close to enough to overcome what remains gargantuan losses in revenue and resulted in GOPPAR decreasing 118.6 percent YOY to -$11.60. Still, the negative dollar amount in May was 32.8 percent better than April’s GOPPAR of -$17.26.

Profit & Loss Performance Indicators — Minneapolis

Key Performance Indicator

May 2020 vs. May 2019

YTD 2020 vs. YTD 2019

RevPAR

-95.0% to $5.45

-62.9% to $34.38

TRevPAR

-95.3% to $7.75

-61.7% to $53.60

Payroll PAR

-80.1% to $10.95

-39.0% to $31.19

GOPPAR

-118.6% to -$11.60

-104.8% to -$2.16

Houston Hotel Performance — May 2020

Houston had a strong May story, illustrated by a 90 percent MOM increase in TRevPAR and a 60.2 percent MOM increase in GOPPAR, which, at -$8.10, is inching closer to the break-even point. However, as COVID cases make a strong resurgence in Texas, including an all-time daily high of 5,489 on June 23 that prompted Governor Greg Abbott to tighten restrictions, the small shoots of growth could be temporary.

Profit & Loss Performance Indicators — Houston

Key Performance Indicator

May 2020 vs. May 2019

YTD 2020 vs. YTD 2019

RevPAR

-88.0% to $15.48

-49.7% to $63.66

TRevPAR

-90.2% to $19.21

-50.5% to $97.85

Payroll PAR

-73.2% to $15.83

-31.8% to $39.98

GOPPAR

-110.0% to -$8.10

-71.3% to $24.24

 


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