We at HSP are following the news closely and keeping up with the potential impacts the pandemic will have on various industries. This week, we are focusing on the hotel industry. We found the following article published on Hotel-Online particularly insightful:
U.S. Hotel Profitability Improved in May, Limited-Service Properties Break Even at 45% Occupancy
Published on June 25, 2020
Broomfield, Colorado –
STR‘s latest monthly P&L data release shows U.S. hotel gross operating profit per available room down 110.1% in May. That percentage change was a slight improvement from April’s decline of 116.9%. Additionally, limited-service properties showed positive profitability on average when surpassing 45% occupancy.
In a year-over-year comparison with May 2019, the industry reported the following:
- GOPPAR: -110.1% to US$-10.26
- TRevPAR: -88.3% to US$28.62
- EBIDTA PAR: -130.9% to US$-24.14
- LPAR (Labor Costs): -69.5% to US$24.30
“Make no mistake, profits are still down significantly, and in many cases, open hotels are struggling to turn a profit,” said Joseph Rael, STR’s senior director of financial performance. “However, consistent with the occupancy and RevPAR trends shown in our weekly data releases, hotels opened up more in May and saw improved business compared with the previous month. As we have noted, the lower end of the market has seen less severe performance declines throughout the time of the pandemic, and in May specifically, we saw limited-service properties begin to turn a profit when crossing the 45% mark in occupancy.”
Among top markets, Phoenix reported the most improvement from April to May in TrevPAR ($18.52), while Los Angeles/Long Beach showed the largest gain in GOPPAR ($28.33).
All of the above insights are outlined in May profitability slides HERE. Industry stakeholders interested in Monthly P&L participation should contact MonthlyPnL@STR.com. Those interested in subscribing to soon-to-be released reports should contact their account manager or info@STR.com.
Key profitability metrics:
TRevPAR – Total revenue per available room
GOPPAR – Gross operating profit per available room
EBITDA – Earnings before interest, income tax, depreciation, and amortization
LPAR – Total labor costs per available room
ABOUT STR
STR provides premium data benchmarking, analytics and marketplace insights for global hospitality sectors. Founded in 1985, STR maintains a presence in 15 countries with a corporate North American headquarters in Hendersonville, Tennessee, an international headquarters in London, and an Asia Pacific headquarters in Singapore. STR was acquired in October 2019 by CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces. For more information, please visit str.com and costargroup.com.
Contact: Haley Luther
hluther@str.com/+1 (615) 824-8664 ext. 3500
