HotStats: U.S. GOPPAR Hovers at Break-Even Mark in January

COVID-19 CBRE forecast

After the worst performing year on record, the hotel industry is still contending with the impact of a global pandemic in 2021. Still, there is cause for optimism at the start of the year, according to HotStats’ latest report on global hotel performance in January 2021. Though travel remains stunted across the world, some regions are showing signs of sustained performance positivity, including the Asia Pacific region and the Middle East.

United States

In January 2021, U.S. gross operating profit per available room (GOPPAR) continued to hover around the break-even mark at -$1.81, a 102.5 percent year-over-year (YOY) decrease, according to HotStats. Since March 2020, the U.S. has recorded 10 months of negative GOPPAR, with October reaching a high mark of $4.98.

U.S. hotel occupancy continues to hang around the 20 percent-plus range, which, despite relative rate progression, is keeping revenue per available room (RevPAR) at around the same level it’s been since August. Like RevPAR, total revenue per available room (TRevPAR) remains stuck in neutral, not varying much from August. At $55.30 in January, it was down 77.7 percent YOY, the result of stunted ancillary revenue from the likes of food and beverage.

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Labor expense has not shown a meaningful uptick since dropping precipitously in April as a reaction to COVID-19 and hoteliers seeking to curb expenses to cushion the bottom line; it’s been steady since October and down 69 percent YOY in January to $31.76 on a per-available-room basis.

As in prior months, all operated and undistributed expenses were down YOY, including utilities, which were down 28.1 percent YOY.

Profit margin in January was slightly negative at -3.3 percent—a 32.8-percentage-point decrease over the same time a year ago.

Asia Pacific

Though there remains a wide chasm in year-over-year comps, the Asia Pacific region has now had eight consecutive months of positive GOPPAR, with January 2021 hitting $5.48, according to HotStats. Though positive, it’s the lowest level recorded since June and 88.1 percent off from the same time year ago.

The relative success of the Asia Pacific region compared to other global regions in containing the spread of COVID-19 has—and continues to have—a positive impact on domestic travel and, by extension, its hotel industry.

Occupancy in the region did recede in January to 35.4 percent, leading to RevPAR of $39.21, which was down 55 percent from the prior year. Conference volume mix percentage—at 22.4 percent—was identical to the same time a year ago, and corporate volume mix percentage was up 7.8 percentage points to 22.7 percent. The positive numbers illustrate a willingness by the traveling public to get back to some semblance of everyday normalcy.

TRevPAR was recorded at $75.10, down 52.8 percent from the same time last year, as ancillary revenue continued to lag. Meanwhile, costs continue to stay down, such as labor, which has leveled off since October and is down 31.4 percent YOY.

At 7.3 percent, profit margin was positive in January, but down almost 20 percentage points from the month prior and 21.6 percentage points from the same time a year ago.

Middle East 

The Middle East has now recorded six straight months of profit positivity. GOPPAR in January 2021 came in at $37.30, close to December’s $38.74 GOPPAR, which was the highest the region has attained since February 2020, according to HotStats.

Like GOPPAR, January RevPAR ($71.40) was similar to December’s, but still down 41.9 percent YOY. And while occupancy was down a couple of percentage points from December, the average rate for the region ($171.01) was 2.6 percent higher than the same time last year—a propitious sign for the rest of the year and indicative of escalating stability in the region.

January’s expenses stayed muted. Total labor costs were down 29.2 percent YOY, while total overheads were down 25.3 percent, both on a per-available-room basis.

Europe 

Continued lockdowns and restrictions across Europe have impeded hotel performance in the region, noted HotStats. In January 2021, GOPPAR decreased its most on a YOY basis since the start of the pandemic, dropping 144.9 percent to -€13.06, the lowest recorded number since June. Profit margin declined to -70.3 percent, a 92.3-percentage-point drop over the same time a year ago.

The profit problem was a function of a dearth in revenue, according to HotStats. Occupancy in January checked in at 12.9 percent, which was 49.9 percentage points lower than at the same time last year and the lowest recorded since June’s 8.6 percent. RevPAR for the month was down 86.8 percent YOY to €11.31 and TRevPAR was down 85.9 percent to €18.58.

The depletion in revenue was accompanied by a complementing decrease in expenses, which has been the case throughout the pandemic. Both labor and overheads were down more than 50 percent YOY.

 

 


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