HotStats: August Proves Positive Month for Regions Outside U.S.

coronavirus economic impact

LONDON — Europe, Asia Pacific, and the Middle East all showed positive gross operating profit per available room (GOPPAR) in August, according to the latest HotStats report. The United States is the only region that has yet to turn a positive month of profit since the COVID-19 pandemic took hold. Meanwhile, China is showing a true V-shaped recovery in profit, having matched December 2019 GOPPAR in August.

The global hospitality industry will be tested in the months to come as the summer months give way to the fall and winter, where a dip in travel, particularly on the leisure side, is typical. This, compounded by a feared second wave in Europe that is prompting further restrictions and lockdowns, including pub and restaurants closures by 10PM in the UK, is precisely the impediment that the global hotel industry wanted to avoid.

United States

The pandemic is still impacting the hotel industry in the United States, which passed 200,000 deaths related to COVID-19 in September. U.S. numbers in August remained grim on a year-over-year basis, which is why in the near-term, any recovery will be judged on month-to-month movement, according to HotStats. While July’s performance was slightly improved compared to June’s numbers, August’s were not as good as July’s.

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It was a roller-coaster month of hotel performance, HotStats reported. Though occupancy was up in the month 4 percentage points over July to 24.8 percent, average rate over the same period was down 1.6 percent, which still led to positive revenue per available room (RevPAR) of 17.2 percent. Total revenue (TRevPAR) was also up 16.3 percent on the back of a rise in total F&B revenue of 20.5 percent.

GOPPAR improved 72 percent from June to July, but regressed month-over-month in August by 22.5 percent. It remained negative at -$6.85 compared to -$5.59 in July. Labor costs increased 27.6 percent on per-available-room basis and total overheads increased 25 percent. Flow-through for August was down 17.4 percent.

Profit and Loss Performance Indicators — United States

KPI

Aug. 2020 vs. Aug. 2019

YTD 2020 vs. YTD 2019

RevPAR

-78.0% to $35.14

-64.3% to $60.97

TRevPAR

-78.6% to $50.81

-63.4% to $97.53

Payroll PAR

-63.9% to $33.09

-45.3% to $52.13

GOPPAR

-109.1% to -$6.85

-90.0% to $9.71

Europe

After five months, Europe’s hotels finally posted positive GOPPAR in August. At €6.37, it was a 282 percent increase over the -€3.50 recorded in July, but still a decrease of 90 percent YOY.

Occupancy gathered steam, up almost 10 percentage points over July, coupled with a €8 hike in average rate. The combination led to RevPAR increasing to $35.44—a 56 percent jump over July.

TRevPAR saw a significant jump over July—up 48 percent to €54.72, but still down 69 percent from the same time a year ago. The stronger top-line growth led to positivity on the bottom line. Both labor and overhead costs remained down by a large margin on a YOY basis—down 55.8 percent and 47.7 percent, respectively. On a month-over-month basis, both measures were up slightly, but not enough to drop GOPPAR back into negative territory.

Profit and Loss Performance Indicators — Europe

KPI

Aug. 2020 vs. Aug. 2019

YTD 2020 vs. YTD 2019

RevPAR

-72.1% to €35.42

-67.6% to €38.45

TRevPAR

-68.9% to €54.70

-64.5% to €61.68

Payroll PAR

-55.8% to €23.49

-43.4% to €30.82

GOPPAR

-90.1% to €6.37

-96.8% to €1.94

Asia Pacific

Asia Pacific, specifically China, continues to be the leader in the recovery. The overall region has seen strides since April, and August was no exception. Occupancy climbed 6.5 percentage points to close to 50 percent over July, while average rate shot up 8.4 percent, leading to a $10 advance in RevPAR.

The region recorded a strong increase in TRevPAR boosted by gains in food and beverage, which was up 21 percent over the month prior to $29.55 per available room. GOPPAR continues to track positively, a trend that began in June after negative GOPPAR was recorded in May of -$3.03. The $19.95 attained in August was 69 percent higher than July.

In China, occupancy in August was just 9 percentage points off from the year prior and the YOY deltas for RevPAR, TRevPAR, and GOPPAR are also shrinking. China’s August GOPPAR of $37.19 matched its December 2019 level and was just $6 off from the same time a year ago. As profit continues its forward march, expenses are coming up, too. Labor costs on a per-available-room basis were up 11 percent in August over July, but still 22 percent down compared to the same time next year. Total overheads rose 11 percent month-over-month.

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

KPI

Aug. 2020 vs. Aug. 2019

YTD 2020 vs. YTD 2019

RevPAR

-50.7% to $48.38

-60.0% to $37.76

TRevPAR

-48.8% to $82.75

-58.1% to $67.45

Payroll PAR

-40.6% to $27.20

-37.1% to $29.43

GOPPAR

-63.8% to $19.95

-88.1% to $6.51

Middle East

In the Middle East, profitability reached positivity for the first time since the region broke even back in March. At $5.48 per available room, it bested July by 221 percent, moving from -$4.50. Average rate jumped $10 over the month prior, helping lead to month-over-month RevPAR growth of 38 percent. Total revenue followed suit, rising to $73.53 per available room—a 31.8 percent increase over the month prior.

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

KPI

Aug. 2020 vs. Aug. 2019

YTD 2020 vs. YTD 2019

RevPAR

-61.5% to $43.80

-53.3% to $53.43

TRevPAR

-59.3% to $73.53

-53.5% to $90.81

Payroll PAR

-40.6% to $31.71

-34.0% to $37.45

GOPPAR

-91.3% to $5.48

-79.3% to $14.21

 


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