October GOPPAR Hits Year High at U.S. Hotels

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October GOPPAR Hits Year High at U.S. Hotels

Profit per room at hotels in the U.S. recorded its highest level of the year in October, as revenue increases were attained across all departments, even in the face of mounting costs, according to the latest data tracking full-service hotels from HotStats.

The 3.6 percent year-on-year increase in October enabled hotels to push profit levels to a high of $126.34 per available room, which was well above the previous high of $120.54 recorded in April 2018. Furthermore, it was approximately $25 above the year-to-date figure, at $101.36, illustrating the strength of bottom-line performance this month.

The growth in profit was driven by an increase across all revenue centers, including rooms (up 3.2 percent), food/beverage (up 2.2 percent) and conference/banqueting (up 2.5 percent), on a per-available-room basis.

Helping drive revenue was an annual high achieved in average room rate, which hit $223.36 for the month. It was also a high for the post global financial crisis era.

As a result of the contribution across all revenue departments, TRevPAR at hotels in the U.S. was recorded at $294.57 this month. This was 3.4 percent above the same period in 2017 and a lofty 12 percent above the TRevPAR recorded for year-to-date 2018 at $262.87.

Profit & Loss Key Performance Indicators – U.S. (in USD)

October 2018 v. October 2017

RevPAR: +3.2% to $182.65

TRevPAR: +3.4% to $294.57

Payroll: +0.1 pts. to 31.5%

GOPPAR: +3.6% to $126.34

The solid top-line performance in the month was slightly marred by a year-on-year increase in costs, which included a 0.1 percentage-point uplift in labor costs to 31.5 percent of total revenue, as well as a 0.3 percentage-point increase in overheads, which grew to 20.9 percent of total revenue.

In spite of the cost creep, the robust increase in revenue resulted in a profit margin of 42.8 percent of total revenue.

Top-line performance in October was led by demand from the commercial sector, which accounted for 45.5 percent of all accommodated roomnights.

Furthermore, the growth in achieved average room rate was supported by increases across all demand segments, including corporate (up 2.6 percent), residential conference (up 2.1 percent), individual leisure (up 2.6 percent) and group leisure (up 4.4 percent).

“It was an extremely positive month of performance for hotels in the U.S., with continued growth leading to new highs across top- and bottom-line metrics,” said David Eisen, director of Hotel Intelligence & Customer Solutions at HotStats. “Still, hotel owners and operators must keep a vigilant eye on expenses, as they show no signs of attenuating.”

City specific, Austin had a banner month, aided by the F1 Grand Prix Circuit of the Americas, which drew some 250,000 spectators over the weekend of October 19-21 to the area.

The uplift in demand at hotels in the city meant that room occupancy levels soared to an annual high of 87.8 percent, which was 2.2 percentage points above the same period in 2017 and almost 7 percentage points above the year-to-date figure. In addition, achieved average room rate at hotels in the Texan capital increased by 1.8 percent to $244.24.

As a result, hotels in Austin recorded a 4.3 percent year-on-year increase in rooms revenue to $214.45, which contributed to the 3.4-percent increase in TRevPAR to $299.10.

Alongside the acclaimed South by Southwest Festival, the F1 Grand Prix is highly anticipated by hotels in Austin as it brings a significant boost in performance levels, illustrated this month by TRevPAR recorded at more than $55 above the year-to-date figure of $243.08.

Profit & Loss Key Performance Indicators – Austin (in USD)

October 2018 v. October 2017

RevPAR: +4.3% to $214.45

TRevPAR: +3.4% to $299.10

Payroll: +0.2 pts. to 22.1%

GOPPAR: +3.5% to $164.03

Despite the 0.2 percentage point increase in labor costs to 22.1 percent of total revenue, hotels in Austin successfully recorded a 3.5 percent increase in profit per room in October to $164.03

Profit performance was only surpassed by the performance in March, when hotels recorded GOPPAR of $167.79, which was led by demand from South by Southwest.

As Austin hotels were helped out by a sporting event, so, too, was the city of Boston, where October baseball is frequent with the post-season success of the Red Sox. The city achieved a robust year-on-year increase in profit in October, as the Red Sox hosted two World Series games and a number of playoff match-ups.

As a result of the burgeoning demand levels, hotels in the city were able to record a 5.5 percent year-on-year increase in GOPPAR to $225.23, a peak for 2018.

The growth in profit at hotels in the city was led by year-on-year increases across all revenue departments, including rooms (up 5.0 percent) and food/beverage (up 4.7 percent) on a per-available-room basis. This contributed to a 5.1 percent increase in TRevPAR to a heady $429.56.

Despite the year-on-year increase in October, profit per room at hotels in the city for year-to-date 2018 is still 1.6 percent behind the same period in 2017, illustrating the challenging operating conditions in the city this year.

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

October 2018 v. October 2017

RevPAR: +5.0% to $315.16

TRevPAR: +5.1% to $429.56

Payroll: -0.2 pts. to 26.0%

GOPPAR: +5.5% to $225.23

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