Asia-Pacific Hotels Post Monthly Performance Gains

Shanghai skyline at night time - Unsplash
Asia-Pacific Hotels Post Monthly Performance Gains

Asia-Pacific hotels may have reached their bottom. Gross operating profit per available room (GOPPAR) in May showed its first month-over-month (MOM) since December 2019, up 78.2% MOM jump, and at -$3.04 is making strides towards breaking-even after turning negative in March.

Occupancy in May was up 7.4 percentage points compared to April to 26.6%. Though this is still 43.6 percentage points below May 2019 numbers, it’s the first time since February that occupancy placed above 25% in the region. This rise in volume drove the 39.5% MOM surge in RevPAR. Further contributing to the top-line, F&B revenue per available room was up by 89.8% MOM, resulting in a much needed 48.1% MOM expansion of TRevPAR.

The 52% flex recorded in May is evidence of the effective cost control measures implemented in the region. (Flex is the amount of profit that is saved when there is a revenue shortfall.) Despite top-line growth, hoteliers in APAC were able to avoid cost creep and managed to reduce labor costs and overheads by 6.7% and 1.3%, respectively and on a MOM basis. As a result, profit conversion in May was recorded at -7.5% of total revenue, placing 43.4 percentage points above the previous month.

Profit & Loss Performance Indicators – APAC (in USD)

KPI

May 2020 v. May 2019

YTD 2020 v. YTD 2019

RevPAR

-75.1% to $22.55

-60.6% to $37.49

TRevPAR

-74.2% to $40.51

-58.8% to $67.16

Payroll PAR

-51.0% to $22.38

-32.2% to $32.03

GOPPAR

-105.8% to -$3.04

-94.0% to $3.37

Although still on the negative side of the number line, profit-per-room in Jakarta showed the first signs of recovery in May, as GOPPAR grew by 10.4% on a MOM basis, the first positive change in the city since March.

May occupancy was up by 2.3 percentage points compared to April, albeit remaining below the two-digit threshold. A 25.1% MOM decline in average rate dampened the effect of this volume increase over RevPAR, which still managed to climb by 1.6% compared to the previous month. TRevPAR jumped by 15.2% MOM, fueled by a 100% increase in F&B revenue per available room.

On the expense side, hoteliers managed to decrease total overheads by 10.6% MOM, though labor costs recorded a monthly uptick of 2.7%. Flex for the city placed at 54%, and profit conversion of total revenue was recorded at -204.0%, far from ideal, but still 58.2 percentage points higher than April.

Profit & Loss Performance Indicators – Jakarta (in USD)

KPI

May 2020 v. May 2019

YTD 2020 v. YTD 2019

RevPAR

-88.9% to $6.24

-50.5% to $32.85

TRevPAR

-90.3% to $11.01

-46.2% to $67.83

Payroll PAR

-46.1% to $21.16

-22.1% to $30.85

GOPPAR

-190.4% to -$22.46

-88.1% to $4.08

The Labor Day holiday (May 1-5) resulted in more than 104 million domestic tourist trips in China, according to the Ministry of Culture and Tourism. In Shanghai, this heightened activity translated into positive per-room profits for the first time since turning negative in February. GOPPAR in the city surged by 182.4% in May compared to April to $8.35.

Occupancy in Shanghai recorded its third consecutive MOM increase in May to 35.3%, a 12.3-percentage-point improvement from April. This volume expansion, combined with a 7.0% MOM average rate climb, resulted in a 64.6% MOM RevPAR increase. F&B revenue per available room soared by 179.5% MOM, leading to 84.1% growth in TRevPAR compared to the previous month.

Amid top-line growth, hoteliers in Shanghai achieved a 2.4% MOM reduction in labor costs and a 5.6% MOM uptick in total overheads. Flex placed at 44.1% and profit conversion in May was recorded at 14.9% of total revenue, 48.1 percentage points above April results.

Profit & Loss Performance Indicators – Shanghai Municipality (in USD)

KPI

May 2020 v. May 2019

YTD 2020 v. YTD 2019

RevPAR

-67.8% to $32.87

-72.0% to $25.83

TRevPAR

-66.4% to $56.21

-69.4% to $47.17

Payroll PAR

-44.6% to $24.23

-31.5% to $30.32

GOPPAR

-88.1% to $8.35

-111.3% to -$6.54

About HotStats

HotStats provides a unique profit-and-loss benchmarking service to hoteliers from across the globe that enables monthly comparison of hotels’ performance against competitors. It is distinguished by the fact that it maintains in excess of 500 key performance metrics covering 70 areas of hotel revenue, cost, profit and statistics, providing far deeper insight into the hotel operation than any other tool. The HotStats database totals millions of hotel rooms worldwide. For more information, visit www.hotstats.com.