Gross operating profit for U.S. hotels improved to 84% of the comparable 2019 level, according to STR‘s June 2021 monthly P&L data release. Labor costs also rose from the previous month and in comparison with 2019.
Each of the key profitability metrics, on a per-available-room basis, came in higher than any month since February 2020, while labor was at its highest level since March 2020.
- GOPPAR: US$50.67
- TRevPAR: US$131.81
- EBITDA PAR: US$33.10
- LPAR (Labor Costs): US$37.39
“After the industry recorded its highest top-line metrics since October 2019, it is no surprise that profitability followed suit,” said Joseph Rael, STR’s senior director, financial performance. “Market leisure demand is driving profitability, as F&B revenues remain weak due to the continued lack of group travel. While profits have improved immensely, levels still remain well below 2019 comparables. We can expect to see profits return at accelerated levels as demand and revenues rebound. While improvement in each of the key metrics can be seen as a win, we must remember many hotels are still being hit hard financially, and labor costs remain depressed when compared with pre-pandemic levels, meaning hotel staffs are doing a lot more with a lot less help.
“One monthly trend that is still ongoing is that properties in the major metros are still struggling. New York City, San Francisco and Oahu Island are still realizing negative GOP, and most top markets are reporting less than 50% of 2019 revenues. Beach destinations such as Miami, Norfolk/Virginia Beach, and Tampa, on the other hand, are experiencing better overall performance.”
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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
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.