HotStats: Hotel Profit Perks Up Globally, Except in Europe

coronavirus

HotStats on Friday released its February 2021 report on hotel performance worldwide, showing positive profitability in regions outside of Europe, including the United States, Asia Pacific, and the Middle East.

United States

After posting negative profits for eight of the last 10 months, the United States saw a turnaround in February as gross operating profit per available room (GOPPAR) turned positive. At $10.82, February’s GOPPAR was 675.5 percent higher than January’s GOPPAR, but still down 89.5 percent from the same time last year.

In step with the boost in profit was a jump in both rooms and total revenue. Revenue per available room (RevPAR) was up $14 over January to $50.81, while total revenue per available room (TRevPAR) increased nearly $20 to $73.81. February’s occupancy for U.S. hotels nearly closed at 30 percent, which would have been the highest mark since March 2020. The 7-percentage-point rise in occupancy month over month was coupled by a jump in rate to its highest level since last March.

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As revenue ticked upward, expenses remained muted. Total labor on a per-available-room basis was $33.13, which is 67.1 percent lower than at the same time last year and less than $2 over January’s.

Undistributed departmental expenses remained depressed across the board year over year (YOY), including utilities, which were down 22.9 percent. Total overhead costs were down 49.6 percent YOY.

U.S. hotel profit margin came in at 14.7 percent—its highest level since last February and only the third time in 12 months that this key performance indicator was positive.

Europe

Favorable data in the United States could not be duplicated in Europe, which continues to contend with country-to-country COVID-related lockdowns. Absent any forward thrust in occupancy and rate, RevPAR remained stuck at €13.66—down 85 percent YOY.

Lack of ancillary revenue stifled TRevPAR and the lack of revenue dropped GOPPAR into negative territory for the fifth consecutive month at -€10.98.

Despite expenses staying down, Europe’s hotel profit margin clocked in at -48.5 percent.

Asia Pacific 

In February 2020, the Asia Pacific region (APAC) first saw its hotel performance fall over the precipice due to COVID-19—which is why GOPPAR showed its first YOY improvement in February 2021. APAC recorded its ninth consecutive month of positive profit, albeit the lowest growth over that same period at only $1.50.

APAC RevPAR came in at $38.25—down 16.4 percent YOY. Occupancy remained above 30 percent, where it has been since last June. Rate was up $6 from the previous month to $116.33.

Like profit, total revenue receded in February to its lowest level since last July. The decrease in TRevPAR—despite still muted expense, including a 17.9 percent decline in total labor and a 14 percent decrease in total overheads—resulted in the deflated GOPPAR number.

Profit margin for the APAC hotel industry in February came in at 2 percent, 1.9 percentage points higher than at the same time last year.

Middle East

The Middle East hotel industry showed the highest GOPPAR of any global region in February 2021, checking in at $19.75—still down 73 percent from the same time a year ago and the lowest level since November.

Beyond profit, top-line numbers continue to perform well in the region. Occupancy remained above 40 percent for the fourth consecutive month, down 29.8 percentage points from the year prior. RevPAR fell month over month to $59.72, a 15 percent decrease over January.

Though labor costs are still down YOY, they have risen month to month, hitting a high of $39.40 in February—$11 higher than April 2020, when the Middle East hotel industry first saw performance massively drop. Overhead costs also rose to the highest level since April.

Profit margin for the region came in at 19.5 percent for February 2021.

 


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