An 8.5 percent year-on-year increase in U.S. hotels’ profit per room in June 2018 contributed to the 4.2 percent profit growth that U.S. hotels recorded in the first half of 2018, according to the latest worldwide poll of full-service hotels from HotStats. According to analysts at HotStats, June’s positive performance was due to an increase in revenue as well as a reduction in costs.
Profit per room at U.S. hotels soared to $111.18 in June, up from $102.46 during the same period in 2017. This was the fifth consecutive month of profit growth at U.S. hotels and the year-on-year increase in GOPPAR was second only to April when profit increased by 9.1 percent.
The 4.2 percent increase in TrevPAR in June was driven by growth across all revenue centers, including rooms (up 4.1 percent), food and beverage (up 2.7 percent), and conference and banqueting (up 2.3 percent) on a per available room basis.
Rooms revenue in June was fueled by a 0.7 percentage point increase in room occupancy to 83.3 percent, as well as a 3.2 percent increase in the achieved average room rate, which hit $210.45.
While June’s growth rate was driven by the commercial segment and included an increase in rate in the residential conference (up 3.9 percent) and corporate (up 0.1 percent) sectors, U.S. hotels also recorded year-on-year growth in the leisure segment, up 2.2 percent to $202.73.
In addition to the growth in top-line performance, U.S. hotels recorded a drop in labor costs for the second time in 2018—down 0.7 percentage points to 33 percent of total revenue. Furthermore, hotels recorded a 0.8 percentage point drop in overheads to 21.7 percent of total revenue, which helped to drive the increase in profit per room.
Due in part to the strong year-on-year increase in June, profit conversion at U.S. hotels hit 40.5 percent of total revenue, which is well above the average in the rolling 12 months to June 2018, at 37.7 percent of total revenue. Flow through at hotels in June was recorded at 78.5 percent, which reflects the strong growth in revenue and cost savings, according to the HotStats report.
“The Federal Reserve raised its outlook for economic growth in the United States in 2018 during the month of June to 2.8 percent from 2.7 percent, as economic activity has been rising at a “solid” rate this year,” CEO of HotStats Pablo Alonso explains. “This has been reflected in the performance of hotels, which have had an excellent period of trading in H1 2018, with the market seemingly going from strength to strength. Hotel owners and operators will be keen to see such growth continue for the remainder of the year and beyond.”
Profit & Loss Key Performance Indicators for U.S. Hotels in June 2018
Compared to June 2017
RevPAR: +4.1% to $175.26
TrevPAR: +4.2% to $274.33
Payroll: -0.7 pts to 33.0%
GOPPAR: +8.5% to $111.18