U.S. Hotels Had a Third Consecutive Year of Profit Growth in 2018

U.S. hotels continued to make money last year. Year-over-year GOPPAR growth of 1.5 percent in December contributed to a 3.4 percent annual increase in profit for hotels in the United States, according to data from HotStats tracking full-service hotels. It was the third consecutive year of GOPPAR growth, following YOY increases of 3.7 percent in 2016 and 3 percent in 2017.

Profit & Loss Key Performance Indicators 
December 2018 vs. December 2017

RevPAR: +2.0% to $132.26
TRevPAR: +2.6% to $225.56
Payroll: +1.1 points to 38.2%
GOPPAR: +1.5% to $71.41

December GOPPAR of $71.41 was the lowest level for the year and 37.1 percent lower than 2018’s total of $97.87. Still, revenue centers were up across the board, including rooms (up 2.4 percent), food and beverage (up 3.3 percent), and conference and banqueting (up 5.1 percent), on a per-available-room basis.

As a result of the movement in revenues, TRevPAR growth for the month was recorded at 2.6 percent YOY at $225.56, which was approximately $33.50 below the full-year figure of $259.10, a 2.9 percent increase over the year prior.

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Rising costs did impact profit levels, as in a 1.1 percentage-point increase in labor to 38.2 percent, as well as a 0.7 percentage-point increase in overheads, which grew to 25.4 percent for the month.

The movement in revenue and costs meant profit conversion at U.S. hotels in December was recorded at 31.7 percent of total revenue, which is below the YTD figure of 37.8 percent.

Following the trend of 2018, room occupancy levels remained challenged in December and fell by 0.7 percentage points YOY to 65.6 percent, which was the lowest volume level for the year. However, a 3 percent increase in achieved average room rate abetted a 2 percent increase in RevPAR. Achieved average room rate grew to $201.64 for the month and marked the 12th consecutive monthly increase in this measure.

“Through challenging economic conditions and political instability, the U.S. hotel industry has once again demonstrated its resilience,” said David Eisen, director of hotel intelligence and customer solutions at HotStats. “Owners and operators hope the positive performance in 2018 will carry through 2019, despite macro concerns and worries over expenses.”

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