U.S. Hotels Record 2018 High for Profit Per Room in October

U.S. hotels recorded their highest level of profit per room for the year in October, attaining revenue increases across all departments despite mounting costs, according to the latest full-service hotels report from HotStats.

Key Performance Indicators

October 2018 vs. October 2017

RevPAR: +3.2% to $182.65
TRevPAR: +3.4% to $294.57
Payroll: +0.1 pts. to 31.5%
GOPPAR: +3.6% to $126.34

The 3.6 percent year-on-year increase in October enabled hotels to push profit levels to a high of $126.34 per available room, which was well above the previous high of $120.54 recorded in April 2018. Furthermore, October profit levels were approximately $25 above the year-to-date figure, at $101.36, illustrating the strength of bottom-line performance for the month.

U.S. hotels saw increases across all revenue centers, including rooms (up 3.2 percent), food and beverage (up 2.2 percent), and conference and banqueting (up 2.5 percent), on a per-available-room basis.

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An annual high in average room rate, which hit $223.36 in October, helped drive revenue. The rate was also a high for the post-global financial crisis era.

As a result of the contribution across all revenue departments, TRevPAR at U.S. hotels hit $294.57 in October—3.4 percent above the same period in 2017 and 12 percent above the TRevPAR recorded for year-to-date 2018 ($262.87).

October’s solid top-line performance was slightly marred by a year-on-year increase in costs, which included a 0.1 percentage-point uplift in labor costs to 31.5 percent of total revenue, as well as a 0.3 percentage-point increase in overheads, which grew to 20.9 percent of total revenue. In spite of the cost creep, the robust increase in revenue resulted in a profit margin of 42.8 percent of total revenue.

Demand from the commercial sector, which accounted for 45.5 percent of all accommodated room nights, led top-line performance in October. All demand segments supported the growth in achieved average room rate, including corporate (up 2.6 percent), residential conference (up 2.1 percent), individual leisure (up 2.6 percent), and group leisure (up 4.4 percent).

“It was an extremely positive month of performance for hotels in the United States, with continued growth leading to new highs across top- and bottom-line metrics,” said David Eisen, director of hotel intelligence and customer solutions at HotStats. “Still, hotel owners and operators must keep a vigilant eye on expenses, as they show no signs of attenuating.”

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