HotStats: Global metrics improve despite challenges

According to the latest report from HotStats, the global hotel industry is producing strong performance numbers against a “climate of financial unease,” with consumer costs on the rise across the board. 

Findings from the report:

U.S. 

Performance in the U.S. is improving, but could plateau if the last three months are any indication. After steep inclines across most revenue metrics from January through March, the past two months have leveled off, but are around 10 percent off prepandemic levels.

In May, when the Transportation Security Administration throughputs were consistently above 2 million on a daily basis, total revenue per available room hit $227, which was on par with the previous month, but still $40 down versus May 2019.

Total revenue was fed by strong numbers in the rooms department, led by average daily rates that remain above prepandemic levels. Corporate travel numbers are "steadily" improving, with corporate average daily rate at record levels combined with a corporate revenue mix percentage in May that is now 3 percentage points from its May 2019 comp.

Despite a number of headwinds, gross operating profit per available room is holding steady. After surpassing $90 in March, it has stayed around that mark through May, hitting $94 in the month, $8 off its pre-pandemic number.

Europe

In Europe, occupancy rates are at their highest levels since November 2019 alongside average daily rates that are now on par with (or higher than) 2019 on a nominal basis. May 2022 European ADR was €30 higher than in May 2019 and is now up 127 percent since its all-time low in May 2020.

The strong room performance carried through into ancillary revenue. Food and beverage revenue has been on a steady incline since January of this year and now sits $6 off its May 2019 level on a per-available-room basis. The combined efforts in the room and F&B departments pushed total revenue to €184 on a per-available-room basis, its highest level since October 2019.

The healthy top-line performance carried through to the bottom line as hoteliers were able to keep expenses in check as best they could. Despite a global energy crisis, utility expenses actually fell in May against the four previous months to around €7 per available room. Still, utility costs remain at all-time highs and May’s level was nearly €2 higher than in May 2019.

Meanwhile, labor costs are trending up and hit €52 per available room in May, which is now on par with pre-pandemic labor costs.

Gross operating profit per available room was recorded at €71, now up €75 since GOPPAR turned negative in January 2022. May’s GOPPAR is now at the same level as May 2019.

Middle East

After hitting a profit high in March, Middle East GOPPAR has had two consecutive months of decline, but the good news is that the region continues to track above prepandemic levels and the dip is likely more to do with seasonality than COVID-19 or other factors.

GOPPAR hit $73 in May, a full $16 higher than in May 2019. Rate continues to drive the profit gains, with ADR hitting $184; however, rate has slid back since its high mark in April of close to $285.

Costs, however, are still affecting hotels’ bottom line. Total payroll is still below prepandemic levels but is climbing and is now $22 higher above its April 2020 low. Meanwhile, utility expenses are ticking upward, but the report notes that this could be due to the warmer season. 

China

After COVID lockdowns hampered much of the country’s travel and tourism industry, China is still underperforming compared to the rest of the world, but showing signs of life.

Occupancy is still down compared to 2019 but improved 6 percentage points up in May over the previous month. The problem, however, is a depleted rate that is now $23 lower than in May 2019. In fact, ADR in the country is only $2 higher than the pandemic low of April 2020.

In May, GOPPAR reached $5.53, but was coming off back-to-back months of negative GOPPAR, indicating gradual improvement.