HotStats: U.S. Flips to Positive Hotel Profitability in October

LONDON — In October, the United States recorded its first positive month of profitability since the start of the COVID-19 pandemic, according to the latest report from HotStats. The country reached gross operating profit per available room (GOPPAR) above $0, but at $5.43, it was still down 95.5 percent compared to the same time last year.

While the United States climbed back into the black and the Middle East and Asia Pacific regions remained above water, Europe’s GOPPAR regressed, backsliding to -€5.06 after two consecutive positive months.

United States 

U.S. hotel profitability was aided by an ongoing, though marginal, rise in both occupancy and average rate, which led to revenue per available room (RevPAR) hitting $40.99 in October—down 78 percent from a year ago, but still a 7.3 percent rise over September and a 365 percent increase over April when RevPAR was at its lowest point ($8.99).

Total revenue (TRevPAR) continued its advancing trend, but the growth has been muted by an overall dearth of ancillary spend that has hampered the ability of hoteliers to realize better gains than normal, according to HotStats. TRevPAR hit $60.89 in October—$5 higher than the previous month, but down 79.3 percent year over year (YOY). F&B RevPAR hit double digits for the first time since March, but is still down 87.9 percent YOY.

Expenses remained muted in October, the result of a decelerated operating model and labor structure, which could carry forward even as the hotel industry ramps further back up. Total labor costs retrenched in October over September, down 23 percent, potentially the result of the end of the summer season. Total labor costs as a percentage of revenue dropped nearly 20 percentage points over September to 47.8 percent, as revenue grew and labor cost decreased.

Profit margin for the United States in October was 8.9 percent—still the first positive measure of the metric since February.

Profit & Loss Performance Indicators — United States

Europe

As the United States bounced back into positive territory, Europe saw regression across the board in October. A more than 5-percentage-point drop in occupancy over September coupled with a €4 reduction in rate led to a 20.7 percent decrease in RevPAR. The drop in RevPAR resulted in a similar drop in TRevPAR, which decreased 18.5 percent over September and was down 76.7 percent YOY.

Like the United States, expenses remained suppressed. Total labor costs were down 52.6 percent YOY, while total overheads were down 45.6 percent YOY. Still, the drop in expenses was not enough to overcome the fall in revenue, leading to negative GOPPAR of -€5.06 in October after two consecutive months of positive GOPPAR.

Profit margin for October was recorded at -11.1 percent.

Profit & Loss Performance Indicators — Europe (in EUR)

Asia Pacific

The bright spot in the global hotel industry remains the Asia-Pacific region, where monthly occupancy reached over 50 percent for the first time, led by China, where occupancy has eclipsed the 60 percent threshold for the past three months.

After a hiccup in September that saw RevPAR dip lower than August, it was back up in October to $53—a 17 percent increase over the month prior. TRevPAR hit $101.50 in the month, a sign that ancillary revenue is making its rebound in tandem with room sales. In September, while RevPAR was lower than August, TRevPAR was higher, and the trend continued in October. GOPPAR reached $27—$9 higher than the month prior, but down 54.8 percent YOY.

In China, GOPPAR hit $43.25, which was only 12 percent off from the same time a year ago, illustrating the country’s solid profit comeback from the depths of the pandemic. Profit was bolstered by a similar return to prior-year revenue levels that saw TRevPAR hit $119.62, just 8.7 percent below the same time last year.

On the expense side in China, costs continue to rise, perhaps a sign also of the overall recovery, according to HotStats’ report. Labor costs per available room hit $32.94, 10.7 percent less than the same time last year, while total overheads were recorded at $26.56, a 13.7 percent decrease over the same time a year ago.

Profit & Loss Performance Indicators — Asia Pacific (in USD)

Middle East

After a string of difficult months, the Middle East hotel market is making its own steady ascent, with RevPAR climbing close to $50 in October—a 19.8 percent rise over the month prior, but still 58 percent down YOY. TRevPAR reached $88.54, led by an uptick in revenue from F&B, which hit $31.12—a $6 increase over September

The confluence of revenue and enervated expense led to a jump in profit for the region. With GOPPAR at $14.11—down 82 percent YOY and 595 percent higher than September—the Middle East hotel market marked the third consecutive month of positive profit in October.

Profit & Loss Performance Indicators — Middle East (in USD)

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