CoStar: U.S. hotels report profit growth in September

A recent increase in U.S. hotel labor costs reflects a normalizing business mix and significant gains in group demand, according to September year-to-date profit-and-loss data from CoStar. 
September 2023 year-to-date per-available-room metrics (percent change from September 2022)

  • Gross operating profit: $75.74 (+6.2 percent)
  • Total revenue: $208.34 (+8.6 percent)
  • Earnings before interest, taxes, depreciation and amortization: $52.95 (+5.1 percent)
  • Labor costs: $69.36 (+13.1 percent)

“September labor costs were higher than the summer months even though overall demand was lower. That is consistent with leisure travel subsiding and corporate travel in peak season,” Raquel Ortiz, STR’s director of financial performance, said in a statement. 

“Revenue metrics have wavered month to month, but growth in labor costs has remained consistent,” Ortiz said. “On a per-occupied-room basis, F&B labor costs were up 9.8 percent year to date, which was the most of any department. That nearly double-digit increase supports the improvement in group business we have been reporting in the top-line metrics and aligns with weekday groups lifting the bottom line. Catering and banquet revenues jumped 20 percent year over year, another measure of the return of corporate and group demand.” 

Profit levels in the major markets are further evidence of business travel and groups, according to analysts. Overall, 13 of the Top 25 markets posted double-digit growth in GOPPAR through September, led by New York City and Oahu. 

“Roughly 60 percent of hotel industry revenue growth in the past six weeks is from weekdays, with the major markets leading the way,” Ortiz said. “Additionally, U.S. group demand has risen by an average of 3.1 percent year over year since Labor Day.”