Hotstats: The Hotel Industry is Recalibrating and Reassessing

Hotel status

Just over a year after the World Health Organization declared COVID-19 a pandemic, the global hotel industry is slowly stirring from hibernation and seeing at least modest gains in traveler demand. The wait has been long, and it remains a work in progress.

In the United States, which saw performance cave last March before bottoming out in April, small gains continued to be made in most key performance indicators in March 2021 —though the strides only shined a light on 2020 metrics.

Consider gross operating profit per available room, which was up 328.9 percent over the same time last year to $30.63. The steep increase is a result of previous numbers, including GOPPAR in March 2020, which checked in at -$13.38, one of eight months in 2020 when profit was negative. Still, March 2021 GOPPAR was the highest it’s been since February of last year and $20 higher than last month.

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March was also the first time in a year that year-over-year (YOY) RevPAR was up (4 percent). It was also $20 higher than last month. Both occupancy and rate were at their highest levels since March 2020, with the former up 5.8 percentage points over the same time a year ago to 36.8 percent.

Total revenue per available room hit triple digits to $100.45, aided by the overall increase in rooms revenue despite still muted ancillary revenue. Expenses continued to stay at bay, with total labor costs down 55 percent over the same time a year ago. And profit margin was up 42.4 percentage points to 30.5 percent, the highest mark achieved since February 2020.

Europe Still Trails

In March, European GOPPAR remained stuck in negative territory at -€8.45. Europe hasn’t recorded positive GOPPAR since the €0.81 it achieved in September 2020.

With overall occupancy still falling below 20 percent, rooms revenue continued to lag with RevPAR down 58 percent versus the same time a year ago. TRevPAR was similarly depressed, also down 58 percent versus the same time a year ago. The shortage in revenue was complemented by a still-constant decrease in overall expenses, but not enough to push out a positive GOPPAR. Though total labor costs were down 53.3 positive on a per-available-room basis, they were up 6.8 percentage points as a percentage of total revenue, highlighting the dearth in incoming revenue.

APAC Rolls On

Asia-Pacific moved across the 50 percent occupancy threshold in March, which, coupled with an average above $100, led to RevPAR that was 115 percent higher than at the same time a year ago. APAC’s hotel industry cratered about two months before the rest of the world, but the region has been able to come back at a quicker pace since. Both TRevPAR and GOPPAR were artificially inflated YOY, 118.9 percent and 296.8 percent respectively, on account of the depths from which the KPIs have come in a year’s time.

Most expenses in the operated and undistributed departments were up YOY, signaling potentially what’s to come for other regions. Most note that expenses would reach an inflection point, where they would show some growth, and APAC, it appears, has met that point. Total labor costs and total overheads were up in the month 13 percent and 14.8 percent respectively versus the same time a year ago. Profit margin in the month was up to 24.5 percent, 51.7 percentage points higher than in March 2020.

Middle East Moves On

The Middle East continued its ascent. Occupancy stayed steady in March at just a tick below 50 percent, with RevPAR moving up 58.3 percent YOY to $72.65. As RevPAR rose, so too did TRevPAR, which at $119.74 was 44.3 percent higher than at the same time a year ago. GOPPAR checked in at $37.70 in March 2021, which was well up over March 2020 when GOPPAR broke even.

Like APAC, the Middle East is showing signs of rising costs. Though total labor costs continued to be down YOY, both utilities and overheads moved up, a sign that operations are resetting. The profit margin of 31.5 percent was 30.7 percentage points higher than last March and more than 12 percentage points higher than February.

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