Hotels in the United States recorded a 5.2 percent year-on-year drop in profit per room in November, according to the latest HotStats data tracking full-service hotels. In line with the decline across the country, Seattle hotels recorded a drop in profit per room in November, falling 9.8 percent YOY to $71.89.
This was the third month of decline in profit per room in 2018 for the city, following a larger drop in February of 11.1 percent. In addition, it is the second consecutive month of profit decline for the city, following a 5.1 percent drop in October.
Profit & Loss Key Performance Indicators
November 2018 vs. November 2017
RevPAR: -4.5% to $142.21
TRevPAR: -3.6% to $203.67
Payroll: +2.7 pts. to 36.8%
GOPPAR: -9.8% to $71.89
This profit pressure is partly a result of growing hotel supply in the city, according to the HotStats report. This supply growth has primarily impacted top-line performance, illustrated by a 4.5 percent drop in RevPAR in November to $142.21. Room occupancy was down 2.6 percentage points to 79.3 percent and achieved average room rate was down 1.4 percent to $179.38.
Seattle hotels saw further departmental declines in food and beverage (down 5.3 percent) and conference and banqueting (down 4.5 percent).
As a result of the movement across all revenue departments, TRevPAR at hotels in Seattle fell by 3.6 percent in November to $203.67, which was 20.5 percent behind the year-to-date figure of $255.99.
An uptick in labor costs further impacted profit performance for Seattle hotels, according to the HotStats report. Labor costs increased to 36.8 percent of total revenue and profit conversion at hotels in Seattle was 35.3 percent of total revenue.
“The Seattle hotel market has added 2,550 rooms since January 2017, highlighted by the recent opening of the 1,260-room Hyatt Regency Seattle, the largest hotel in the Pacific Northwest,” said David Eisen, director of Hotel Intelligence and Customer Solutions at HotStats. “The city’s hoteliers now face a challenging period of operation, which will be further exacerbated by properties in the planning or development phases across King, Snohomish, and Pierce counties.”