U.S. GOPPAR, RevPAR up in May despite payroll leaps

The Ritz-Carlton, San Francisco exterior
Hotels in San Francisco, like the The Ritz-Carlton, San Francisco, have faced large increases in payroll costs. Photo credit: The Ritz-Carlton, San Francisco

After the year’s first negative turn in gross operating profit per available room (GOPPAR) in April, May proved a stronger month for U.S. hotels. According to data from HotStats, GOPPAR and revenue per available room (RevPAR) both rose 2 percent year over year in May to $112.80 and $172.24, respectively. 

May’s rise in profits came despite a 4.7% YOY increase in payroll to $97.49, on a per-available-room basis. Non-room departments specifically helped offset this rise with YOY revenue increases recorded in F&B (up 3.5 percent) and conference and banqueting (up 2.4 percent), on a per-available-room basis. Overall, total revenue per available room (TRevPAR) increased 3.4 percent YOY to $283.54.

 “Despite resuming growth in revenue this month, hoteliers in the U.S. are reminded to keep an eye on creeping costs and their impact on profit,” said David Eisen, HotStats’ director of hotel intelligence and customer solutions, Americas. “Payroll, for one, continues to be a thorny issue that hoteliers need to stay vigilant on.”

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San Francisco, where the city’s minimum wage rose from $14 to $15 per hour, particularly reflected the impact of large wage growth. There, payroll leaped 9.3 percent YOY to $147.77 on a per-available-room basis. Despite RevPAR and TRevPAR rising at rates above the national average, 5.7 percent and 4.2 percent, respectively, GOPPAR fell 1.6 percent.

HotStats also looked at Los Angeles. There, payroll rose 5.4 percent to $102.47 on a per-available-room basis. Unlike San Francisco, this came as RevPAR and TRevPAR only rose 0.7 percent and 1.4 percent, respectively. Consequently, GOPPAR dropped by 4.7 percent.

April was the only month thus far in 2019 where HotStats found U.S. hotels experienced a YOY decline in profit per room. With occupancy and achieved average room rate down 0.6 percent and 0.9 percent, respectively, RevPAR fell 1.6 percent. GOPPAR fell even more, down 3.7 percent, as F&B and conference and banqueting decreased 1.3 percent and 2.1 percent, respectively, on a per-available-room basis.

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