Hotel profit per room peaks in October

Hotels in Austin, Texas, saw occupancy reach a high of 87.8 percent in October 2018 thanks to the F1 Grand Prix Circuit of the Americas. This helped the city's hotels attain an average room rate increase of 1.8 percent, reaching $244.24. Photo credit: Getty Images/RoschetzkyIstockPhoto

Profit per room in the U.S. reached the highest levels recorded for the year this past October, a report from data analyst HotStats shows.

October's high guestroom revenue was attained across all hotel departments, despite rising operating costs. Overall, gross operating profit per available room was up 3.6 percent year-over-year, allowing hotels to reach profit levels of $126.34 per available room, above the previous high of $120.54 recorded April 2018. October 2018's results were also roughly $25 higher than year-to-date figures, or $101.36 in October 2017.

HotStats attributes this increase in profits to improvements across all hospitality revenue centers. When compared with last year, rooms profit was up 3.2 percent, food and beverage profit was up 2.2 percent and conference and banqueting profit was up 2.5 percent on a per-available-room basis.

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Average room rates also assisted the hotel industry's October performance, reaching an annual high of $223.36, also a high for the post global financial crisis era.

Total revenue per available room at U.S. hotels was recorded at $294.57 in October 2018, a 3.4-percent lift above the same period in 2017 and 12 percent above the total RevPAR recorded year-to-day 2018 at $262.87.

As previously mentioned, the industry's positive performance was slightly offset by ever-increasing costs in the hospitality segment. Including a 0.1-percent increase in labor costs, costs now account for 31.5 percent of total revenue, as well as a 0.3-percent increase in overheads which grew to 20.9 percent of total revenue.

Testament to the current strength of the industry, growth in hotel revenues resulted in a profit margin of 42.8 percent despite cost creep.

“It was an extremely positive month of performance for hotels in the U.S., 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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