Report: U.S. hotel profits gain traction in November

Photo credit: Pixabay/Gerd Altmann

After hotels in the United States saw negative profits in October, gross operating profit per available room grew 6.1 percent year over year to $91.23, according to a recent HotStats report. That growth was the second highest increase in 2019.

The month was kind to all of the key performance indicators, according to the data. Food-and-beverage revenue per available room was up 4.1 percent when compared to November 2018 figures. RevPAR was up 1.7 percent to $162.67, led by a 1 percent increase in average daily rate. This combination resulted in a 3.2 percent year-over-year increase in total revenue for U.S. hotels (+1.5 percent, year to date). Profit margin was up 1 percentage point to 35.1 percent, and total revenue per available room was up 3.2 percent to $260.28.

Related Story: STR: U.S. hotels see performance growth in November

However, labor costs on a per-available-room basis also grew 2 percent. However, the strong revenue story led to a 0.4-percentage-point decrease in labor costs as a percentage of total revenue. Other year-over-year costs also were up, including sales and marketing (+2.3 percent) and administrative and general (+11.5 percent). Total overhead costs on a per-available-room basis were up 1.2 percent.

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L.A. Up, NYC Down

Los Angeles was a clear winner during November, according to the data. The city experienced one of its best months of the year, reaching annual year-over-year highs in RevPAR (+7.3 percent to $180.35) and TRevPAR (+4.6 percent to $260.47) increases. RevPAR during the month was almost entirely led by occupancy, up 5.6 percentage points. However, profit margin for the month was up 2.2 percentage points to a still low 28.6 percent.

While total overheads and labor costs were both up on a year-over-year basis in Los Angeles, 6.5 percent and 2.1 percent, respectively, the boosted revenue more than covered the expense growth. This led to the second highest year-over-year GOPPAR increase of the year in the city (+13.3 percent to $74.58). Labor costs as a percentage of revenue came down 1 percentage point to 40.6 percent.

Related Story: Does the current U.S. hotel cycle have room to grow?

Meanwhile, although New York City continually sees some of the highest rates and RevPAR numbers in the U.S., November continued what has been a dismal year of year-over-year comps for the city in revenue and profit.

To date, HotStats noted that there has not been one month of year-over-year RevPAR or GOPPAR growth in New York City during 2019. RevPAR was down 8.7 percent year over year during November as rate fell 7 percent and occupancy dropped 1.6 percentage points. Year to date, TRevPAR is down 4.6 percent.

GOPPAR was down 17.5 percent year over year, even though total overheads and labor costs came down in November, 1.7 percent and 1 percent, respectively. The profit margin for the city’s hotels was down 3.9 percentage points to 33.3 percent.

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