USA, Washington, D.C. March 26, 2018

After a somewhat shaky start to the year, hotels in the U.S. recorded a robust 4.4 percent increase in profit per room in February, which was fuelled by year-on-year growth in revenue from the leisure segment, according to the latest worldwide poll of full-service hotels from HotStats.

The punchy increase in profit per room recorded at hotels in the U.S. this month, which grew to $95.99, was equivalent to a profit conversion of 36.8 percent of total revenue; and was driven by a 3.6 percent year-on-year increase in TrevPAR to $261.04.

Increases across non-rooms departments in February contributed to the growth in TrevPAR and included an uplift in food & beverage revenue (+5.4 percent), as well as conference & banqueting revenue (+6.9 percent) on a per available room basis.

The growth in total revenue was also supported by a robust increase in rooms revenue, which was as a result of an uplift in room occupancy (+0.5 percentage points), to 75.3 percent, as well as achieved average room rate (+1.3 percent) to $207.81, which helped fuel a 1.9 percent increase in RevPAR to $156.42.

Top-line growth at hotels in the U.S. was as a result of rate growth in both the individual leisure (+3.2 percent) and group leisure (+3.6 percent) segments this month, which was in contrast to the decline in achieved average rate in the residential conference (-1.3 percent) and corporate (-2.4 percent) segments.

Profit & Loss Key Performance Indicators - US (in USD)

February 2018 v February 2017

RevPAR: +1.9% to $156.42

TrevPAR: +3.6% to $261.04

Payroll: +0.0 pts to 35.7%

GOPPAR: +4.4% to $95.99

“The widely anticipated 'Trump Slump', so called because the number of overseas visitors traveling to the U.S. was expected to decline in line with President Trump taking office and the implementation of travel bans and increased security protocols, appears to either not have materialized or not been as severe as feared.

Either way, it is having little impact on the ability of hotels in the U.S. to capture demand from the leisure segment, which is great news for hotel investors and operators who will welcome a broadening of the demand based,” said Pablo Alonso, CEO of HotStats.

While labor costs remained relatively flat across the operation this month at 35.7 percent of total revenue, the uplift in payroll presented challenges in specific departments, which included the rooms department.

Despite the growth in RevPAR, profit conversion in the rooms department fell by 0.4 percentage points to 73.6 percent of rooms revenue, as a result of incremental increases in departmental payroll levels, which grew to 16.7 percent of rooms revenue in February.

In contrast to the positive performance of hotels across the U.S. this month, profit per room at properties in Boston fell by 54.8 percent to just $14.96, as a result of declining revenues across all departments.

The decline in RevPAR at hotels in Boston was as a result of a fall in room occupancy, which dropped by 1.6 percentage points, to 69.8 percent, as well as a 2.1 percent decline in achieved average room rate to $179.93.

In addition to the drop in rooms revenue, falling non-rooms revenues included a decline in food & beverage revenue (-18.4 percent), as well as conference & banqueting revenue (-21.5 percent) on a per available room basis, which contributed to the 8.1 percent year-on-year decline in TrevPAR at hotels in Boston in February to $180.60.

Profit & Loss Key Performance Indicators - Boston (in USD)

February 2018 v February 2017

RevPAR: -4.2% to $125.66

TrevPAR: -8.1% to $180.60

Payroll: +6.6 pts to 55.4%

GOPPAR: -54.8% to $14.96

The decline in revenue levels further exacerbated the increase in labor costs at hotels in Boston, which increased by 6.6 percentage points to 55.4 percent of total revenue.

As a result of the movement in revenue and costs, profit conversion at hotels in Boston fell to just 8.3 percent of total revenue.

“The Boston hotel market is in the middle of a building boom, which included the addition of approximately 1,500 bedrooms in 2016 and a further 700 bedrooms in 2017.

Key openings are testing the market in terms of volume as well as price, which is primarily due to their positioning in the mid-market and 'affordable luxury' segments, including properties operating under the Aloft, AC by Marriott, Hilton Garden Inn, and Yotel brands.

A further 4,500 bedrooms are in the hotel development pipeline in Boston and due to open in the next few years, which is likely to mean there is some pain to come for the capital of Massachusetts,” added Pablo.

Much further south, February is typically a peak period of performance at hotels in Phoenix due to the climate and this month was no different with TrevPAR climbing by 1.5 percent to $382.05, which is more than 40 percent above the 12-month rolling average for hotels in the desert city at $268.38.

The growth in total revenue was led by a 3.9-percent increase in RevPAR to $210.05, which was as a result of year-on-year increases in both room occupancy (+1.5 percentage points) and achieved average room rate (+2.1 percent), as well as increases in non-rooms revenues.

While top line performance at hotels in Arizona was buoyant, the data suggests it was somewhat fuelled by bookings via third party intermediaries, illustrated by the 17.3 percent year-on-year increase in rooms costs of sales (i.e., the HotStats measure of travel agents' commissions, reservation fees, GDS fees, third party fees and Internet booking fees), to 4.7 percent of rooms revenue.

Despite the uplift in rooms costs of sales, hotels in Phoenix were able to cut costs in other departments, which included a 0.1 percentage point saving in labor costs to 27.3 percent of total revenue.

As a result, at $183.23, GOPPAR at hotels in Phoenix was 1.3 percent ahead of the same period in 2017 and approximately 95 percent above the rolling 12-months to February 2017, at $94.12.

Profit & Loss Key Performance Indicators - Phoenix (in USD)

February 2018 v February 2017

RevPAR: +3.9% to $210.45

TrevPAR: +1.5% to $382.05

Payroll: -0.1 pts to 27.2%

GOPPAR: +1.3% to $183.23

Editor's Notes: The hotels profiled in this report are drawn from the HotStats database and reflect the portfolios and distribution of the hotel chains that we survey and which operate in the full-service sector. Please note: The data samples are reviewed and rebased each year to reflect the changes in the HotStats survey base. As a result, performance ratios published last year may differ from those contained within this report.

Glossary:

• Occupancy (%) - Is that proportion of the bedrooms available during the period which are occupied during the period.
• Average Room Rate (ARR) - Is the total bedroom revenue for the period divided by the total bedrooms occupied during the period.
• Room Revpar (RevPAR) - Is the total bedroom revenue for the period divided by the total available rooms during the period.
• Total Revpar (TRevPAR) - Is the combined total of all revenues divided by the total available rooms during the period.
• Payroll % - Is the payroll for all hotels in the sample as a percentage of total revenue.
• GOP PAR - Is the Total Gross Operating Profit for the period divided by the total available rooms during the period.

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