Finance & DevelopmentFinanceHotStats: U.S. Hotel Profit Stuck in Neutral as World Switches Gears

HotStats: U.S. Hotel Profit Stuck in Neutral as World Switches Gears

LONDON — For the seventh consecutive month, U.S. hotels remained in negative gross operating profit per available room (GOPPAR) territory in September 2020; at -$9.19, it was a 34-percent regression from the month prior and a 109.6 percent year-over-year (YOY) decrease, according to new data from HotStats.

September and into October are typically strong months for U.S. hotels, but the data show that YOY comparison is becoming increasingly less reliable as the pandemic soldiers on.

Dwindling profit appears to be a function of unrelenting expenses, as revenue, however small, continues to show month-to-month improvement. RevPAR was up to $38.11—a 7.5 percent increase over August that was minimally juiced by a 1.7-percentage-point increase in occupancy and a less-than-a-dollar jump in average rate. Total revenue per available room rose more than $4 over the previous month, as revenue from food and beverage (up only slightly to $8.69) and other ancillary items remained muted.

As some of the previously closed hotels across the United States begin to reopen, labor costs in September saw a slight uptick on a per-available-room basis, having jumped $12 since April, when the hotel industry cratered due to the coronavirus. As labor costs have increased, so too have they as a percentage of total revenue, now up 9 percentage points since July, pointing to costs continuing to increase at a higher rate than revenue. Total overhead costs were down 46.8 percent YOY, but up 5.5 percent over August.

The outlook for the hotel industry remains fuzzy—organizations such as the American Hotel & Lodging Association (AHLA) have ongoing campaigns to convince Congress to pass another round of stimulus. A recent survey showed that registered U.S. voters believe travel and tourism is the most-affected industry by the economic downturn caused by COVID-19.

“U.S. hotels can’t seem to break out of their profit malaise unlike other global regions, which have cinched at least positive month-to-month profit,” said David Eisen, HotStats director of hotel intelligence, Americas. “A summer bump from leisure travel could give way to a quieter winter, as corporate and group travel are forecasted to remain muted. Hoteliers have found innovative ways to generate revenue from their assets, but it may not be enough to fill a rather widening gap.”

Profit & Loss Performance Indicators — United States

Key Performance Indicator (KPI)

Sept. 2020 vs. Sept. 2020

YTD 2020 vs. YTD 2019


-77.5% to $38.11

-65.7% to $58.62


-79.0% to $55.55

-65.0% to $93.19

Labor Costs PAR

-60.2% to $37.81

-46.9% to $50.63


-109.6% to -$9.19

-92.1% to $7.70


Europe Pulls Back

Europe remained profit positive in September, but only slightly, and well off from August. GOPPAR in the month was a limp €0.93, 94 percent worse than the month prior and 99 percent down from the same time a year ago. September 2019 was also the second-highest recorded GOPPAR metric that year (€91.42), runner-up to only June (€96.97).

September occupancy ticked down slightly over the previous month to 29.2 percent, which was still the second-highest percentage since the pandemic’s start. However, the worry is that the summer thrust might have lost its propulsion, as the percentage of volume from the leisure segment fell almost 7 percentage points from August. RevPAR was also down €3.

TRevPAR matched August’s output at €55.39, which was 73.8 percent off from the same time last year, but still €20 higher than July. Total overhead costs increased slightly over August and were still 45 percent down from the same time a year ago. Overheads were down 46 percent compared to the highest month for overheads in 2019, which was June at €43 per available room.

Labor costs as a percentage of total revenue settled in at 49 percent, which, though still high, were significantly lower than the plus-100 percent levels seen during the height of the pandemic, illustrative of wan revenue mixed with yet unconstrained costs.

Profit & Loss Performance Indicators — Europe (in EUR)


Sept. 2020 vs. Sept. 2019

YTD 2020 vs. YTD 2019


-77.1% to €33.53

-68.8% to €37.89


-73.8% to €55.39

-65.7% to €60.93

Labor Costs PAR

-51.3% to €27.46

-44.3% to €30.37


-99.0% to €0.93

-97.2% to €1.77


APAC Steady

Asia Pacific (APAC) hotel profits remained steady in September. GOPPAR stayed positive at $18.74, slightly down from August, but still 62.5 percent down compared to the same time last year. The region has been the one standout in what’s been an overall uneven global rebound from COVID-19. At $45.12, APAC recorded the highest RevPAR of any total region, aided by an occupancy rate closing in on the 50 percent barrier, which hasn’t been achieved since January of this year.

Though some key performance indicators retreated versus August, TRevPAR was the exception. At $88.76, it was $6 higher than the month prior, aided by a large jump in revenue from F&B, which increased 30 percent over August and was the highest that metric has hit since January, at the beginning of the pandemic. The rise in F&B is propitious news for the region and universally, illustrating that as countries get a better hold over the pandemic, the more people are willing to travel for work and business, slowly filling hotels not only for sleep, but to eat and drink.

Total overhead costs jumped marginally in the month to $27.16 per available room, part of a gradual increase in the metric since May. Labor costs on a per-available-room basis recorded a similar trend, up around $2 month-over-month.

China’s successful surge carried on in September. At $34.28, the country’s GOPPAR was only 11 percent off from the year prior. Traveler confidence is leading the way. Occupancy in China reached a heady 63.6 percent in September, which was only 1.5 percentage points less than September 2019. The strong occupancy helped lead to RevPAR of $56.45, which was 12.7 percent less than the same time a year ago. TRevPAR reached triple digits for the second consecutive month—$6 higher than in August. Expenses remained down YOY, with total labor and overheads down 17.3 percent and 14.6 percent, respectively. September profit margin hit 31.8 percent—up 1.2 percentage points YOY.

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


Sept. 2020 vs. Sept. 2019

YTD 2020 vs. YTD 2019


-48.0% to $45.12

-58.8% to $38.52


-45.1% to $88.76

-56.6% to $69.72

Labor Costs PAR

-37.4% to $29.57

-37.1% to $29.44


-62.5% to $18.74

-85.5% to $7.84


Middle East Shows Composure

After bouncing back to positive profitability in August, the Middle East remained there in September, but not by much. GOPPAR was $1.59—72.5 percent below what it was in August. RevPAR fell back $2 from August—a function of a drop in average rate, which fell more than $10 from August against occupancy that was up more than a percentage point.

TRevPAR remained flat from August, settling in at $73.95, which—though 55 percent lower than at the same time last year—was 121 percent higher than its April COVID low of $33.44.

Labor costs inched up only slightly, but still accounted for more than 50 percent of total revenue. Total overhead costs were up $3 to $38.57 per available room.

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


Sept. 2020 vs. Sept. 2019

YTD 2020 vs. YTD 2019


-55.5% to $41.49

-53.5% to $52.01


-55.7% to $73.95

-53.7% to $88.95

Labor Costs PAR

-41.5% to $33.27

-34.8% to $37.02


-96.3% to $1.59

-80.3% to $12.96


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