STR: U.S. hotel profitability down in November

Hotels in Chicago were unprofitable at the GOP level in November. Photo credit: Getty/ Easyturn (A look at the Chicago skyline)

In the penultimate month of 2020, U.S. hotel profitability fell back to levels similar to those reached in the early months of the pandemic. At the same time, year-over-year declines worsened from October, according to STR‘s monthly P&L data release. 

In a year-over-year comparison with November 2019, the industry reported gross operating profit per available room fell 97.5 percent to $2.13; total revenue per available room declined 73.5 percent to $60.92; earnings before interest, income tax, depreciation, and amortization per available room dropped 120.2 percent to $-12.30; and labor costs were down 61.4 percent to $31.32.

The industry’s GOPPAR was the lowest since June, when it was $-5.89.

“Profitability data fell in line with the November performance metrics we released earlier this month, as U.S. demand and occupancy fell to their lowest levels since May ahead of the Thanksgiving holiday,” said Raquel Ortiz, assistant director of financial performance at STR. “As a result, labor costs were cut roughly 48 percent to adjust to reduced demand levels. 

“In recent months, profitability was gaining traction, but due to rising COVID-19 cases and another round of economic closures, levels have since backpedaled,” Ortiz continued. “With GOPPAR down 83 percent and EBITDA down more than 100 percent through the first 11 months of the year, we can expect nearly zero profit for 2020 in total. Seven of the major markets remain unprofitable at a GOP level, where we typically see 35-45 percent margins. New York and Chicago have consistently shown an oversized impact on profits compared with other markets, likely due to higher labor and fixed costs. Additionally, full-service GOPPAR in the top markets has dropped from 100 dollars in 2019 to just 12 dollars thus far in 2020.”