NATIONAL REPORT—Not even a government shutdown could throw the U.S. hotel industry off-kilter. Hotels picked up essentially where they left off in 2018, demonstrating a sustained uptrend in profit growth.
U.S. properties recorded a 2.4% year-over-year increase in profit per room in January, driven by growth across all revenue centers and despite increased labor costs, according to the latest data tracking full-service hotels from HotStats.
The positive growth story built on the 3.4% total increase in GOPPAR recorded in 2018. The increase in January was led by growth in non-rooms revenues, which increased by 5.3% YOY. The growth in ancillary revenues included increases in food & beverage (up 4.4%) and conference & banqueting (up 6.5%), on a per-available-room basis.
In contrast, RevPAR growth was comparatively muted in the month at 0.8%, fueled entirely by rate, as room occupancy fell by 1.0 percentage points to 67.4%. Average room rate increased by 2.3% to $209.10.
TRevPAR increased by 2.6% to $239.18, maintaining the positive growth performance in this measure following the 2.9% YOY increase in 2018.
Profit & Loss Key Performance Indicators – U.S. (in USD)
January 2019 v January 2018
RevPAR: +0.8% to $140.90
TRevPAR: +2.6% to $239.18
Payroll: +0.3 pts. to 39.4%
GOPPAR: +2.4% to $76.27
On the expense side, payroll continued to rise, increasing 3.4% YOY on a per-available-room basis and 0.3 percentage points as a percentage of total revenue to 39.4%. Overheads were also up 0.3 percentage points as a percentage of total revenue to 25.1%.
January’s profit margin of 31.9% was 0.1 percentage points lower than the same time last year.
The federal government shutdown, which, at 35 days, from late December through late January, was the longest U.S. government shutdown in history, did throw a wrench into January’s results.
GOPPAR levels at hotels in Washington, D.C., plummeted 81% YOY to $1.57 per available room. This followed an 89.6% drop in GOPPAR in January 2018 versus January 2017, an effect of the President Donald J. Trump inauguration and Women’s March.
January 2019 room occupancy fell by 4.2 percentage points to 54.5% and led to a 5.2% drop in RevPAR. Declines were recorded across all departments, including food & beverage, which fell by 7.2% YOY on a per-available-room basis.
In line with the movement in departmental revenues, TRevPAR fell by 5.3% for the month to $161.95, which was more than 70% below the TRevPAR recorded in the rolling 12 months to January 2019 at $279.21.
The decline in revenue was exacerbated by rising costs, led by an increase in payroll as a percentage of total revenue, which grew by 1.4 percentage points to 63.1%.
“Washington, DC, hotels felt the brunt of the government shutdown,” said David Eisen, director of hotel intelligence and customer solutions, Americas, for HotStats. “Despite its length, it was mostly contained to the nation’s capital and had less of an impact on the rest of the country’s hotels. While positivity continues, hoteliers in 2019 will still have to contend with growing expenses that can have an adverse impact on profitability.”
Profit & Loss Key Performance Indicators – Washington DC (in USD)
January 2019 v January 2018
RevPAR: -5.2% to $104.15
TRevPAR: -5.3% to $161.95
Payroll: +1.4 pts. to 63.1%
GOPPAR: -81.0% to $1.57
In contrast to DC, hotels in New Orleans benefited from the temperate climate and events, including the Sugar Bowl and beginning of Mardi Gras celebrations, which fueled a 15.3% GOPPAR increase.
In addition to the 4.7% increase in RevPAR to $144.24, the combination of a 1.6-percentage-point increase in room occupancy and a 2.4% increase in ARR, hotels recorded an 11.7% increase in non-rooms revenue, which hit $87.18 for the month.
Profit & Loss Key Performance Indicators – New Orleans (in USD)
January 2019 v January 2018
RevPAR: +4.7% to $144.24
TRevPAR: +7.2% to $231.42
Payroll: -1.1 pts. to 30.5%
GOPPAR: +15.3% to $97.49
