MIDDLE EAST & AFRICA
An uplift in room occupancy levels helped drive growth in revenue and profit for hotels in the Middle East and Africa this month, and marked a positive end to a year of mixed results for the region, according to the latest worldwide poll of full-service hotels from HotStats.
Although hotels in the Middle East & Africa suffered a 2.9% drop in achieved average room rate in December, to $189.18, a 3.1-percentage point increase in room occupancy, to 66.6%, helped drive a 1.8% increase in RevPAR, to $125.94.
Whilst an increase in volume was achieved across most segments, it was at the expense of a decline in achieved average room rate in the Residential Conference (-4.6%), Individual Leisure (-8.2%) and Group Leisure (-9.2%) sector rates.
The uplift in volume contributed to an increase in Non-Rooms Revenues, including Food & Beverage (+5.0%) and Conference & Banqueting (+4.1%), which supported a 2.3% increase in TrevPAR in December, to $225.14.
Profit & Loss Key Performance Indicators – Middle East & Africa (in USD)
December 2017 v December 2016
RevPAR: +1.8% to $125.94
TrevPAR: +2.3% to $225.14
Payroll: -0.7 pts to 23.3%
GOPPAR: +3.5% to $95.63
In addition to the growth in TrevPAR, profit levels at hotels in the Middle East & Africa were further boosted by a 0.7-percentage point saving in Payroll, which fell to 23.3%.
As a result of the movement in revenue and costs, GOPPAR at hotels in the region increased by 3.5% in December, to $95.63, which was equivalent to a profit conversion of 42.5% of total revenue.
“The diversity of hotel markets across the Middle East & Africa and their key demand drivers means it always going to be a mixed bag of top and bottom line performance, but this year has been particularly volatile due to the ongoing oil crisis, political and economic instability and security concerns.
It is therefore pleasing to report such a positive month of trading for hotels in the region at the end of 2017 and we look forward to profit performance recovering further in 2018,” said Pablo Alonso, CEO of HotStats.
Amongst the strong performing hotel markets this month was Abu Dhabi, which bucked its own 2017 trend of falling revenue and profit levels, to record a 15.9% increase in GOPPAR.
The growth in revenue was led by a 9.0% increase in RevPAR, to $117.33, as hotels in Abu Dhabi successfully recorded an increase in both room occupancy (+3.6 percentage points) and achieved average room rate (+4.0%).
Profit & Loss Key Performance Indicators – Abu Dhabi (in USD)
December 2017 v December 2016
RevPAR: +9.0% to $117.33
TrevPAR: +4.8% to $220.18
Payroll: -2.2 pts to 26.6%
GOPPAR: +15.9% to $78.66
For hotels in Abu Dhabi, the growth in top line revenues this month was almost entirely driven by the commercial segment, illustrated by the year-on-year increases in achieved rate in the Residential Conference (+41.6%) and Corporate (+6.3%) segments, but was at the expense of a decline in the Leisure segment.
A number of major conferences hosted at ADNEC helped to drive demand for hotel accommodation in the UAE capital this month, including the International Diabetes Federation congress, which attracted more than 7,500 attendees.
In addition to the growth in Rooms Revenue, increases in Non-Rooms Revenues helped hotels in Abu Dhabi to record a 4.8% increase in TrevPAR, to $220.18.
The growth in top line revenues, as well as cost savings, which included a 2.2-percentage point drop in Payroll, contributed to GOPPAR increasing to $78.66 in December.
In contrast to the performance of hotels in Abu Dhabi, political and economic challenges in Qatar continue to negatively impact the performance of hotels in the capital, Doha, which in December contributed to the plummeting top and bottom line performance levels.
For hotels in Doha, a 2.4-percentage point decline in room occupancy, to 61.0%, as well as a 7.8% decline in achieved average room rate, to $163.08, contributed to the 11.4% year-on-year decline in RevPAR, to $99.40.
Profit & Loss Key Performance Indicators – Doha (in USD)
December 2017 v December 2016
RevPAR: -11.4% to $99.40
TrevPAR: -8.3% to $286.37
Payroll: +1.9 pts to 29.6%
GOPPAR: -20.5% to $81.08
In addition, hotels in Doha suffered declines in Non-Rooms Revenues, including Food & Beverage (-6.1%) and Conference & Banqueting (-8.1%), which contributed to the 8.3% drop in TrevPAR, to $286.37.
The decline in revenue levels was further exacerbated by rising costs, which included a 1.9-percentage point increase in Payroll, to 29.6% of total revenue. As a result, GOPPAR at hotels in Doha fell by 20.5% year-on-year to $81.08 for the month of December.
“Despite the sanctions imposed by neighbouring countries, economic growth in Qatar remained surprisingly robust in 2017, with further growth anticipated in 2018. However, the growth has primarily been through the construction sector and spurred by government-led initiatives; meanwhile, the tourism industry has been left floundering, evidenced by the performance of hotels in Doha this month,” added Pablo.
EUROPE
Hotels in Europe recorded a 7.0% increase in profit per room in December, which concluded a positive year of performance for hotels in the region.
Hotels in Europe maintained their consistent growth this month, recording a 0.4 percentage point increase in room occupancy, to 59.8%, as well as a 4.2% increase in achieved average room rate, to €145.26, which contributed to the 4.9% year-on-year increase in RevPAR, to €86.87.
In addition to the growth in Rooms Revenue, hotels in Europe recorded an increase in Non-Rooms Revenues, including Food & Beverage (+3.5%), Conference & Banqueting (+4.9%) and Leisure (+1.9%), on a per available room basis, which contributed to the 4.2% increase in TrevPAR, to €144.70.
Despite room occupancy levels in December being well below the annual performance, hotels in Europe were able to successfully record increases in achieved average rate across a number of segments, including Residential Conference (+3.8%), Corporate (+9.4%) and Individual Leisure (+6.7%).
Profit & Loss Key Performance Indicators – Europe (in EUR)
December 2017 v December 2016
RevPAR: +4.9% to €86.87
TrevPAR: +4.2% to €144.70
Payroll: +1.2 pts to 38.6%
GOPPAR: +7.0% to €37.11
Whilst hotels in Europe suffered an increase in costs, which included a 1.2-percentage point uplift in Payroll, to 38.6% of total revenue, GOPPAR levels increased by 7.0% year-on-year, to €37.11. This is equivalent to a profit conversion of 25.6% of total revenue.
In line with the positive performance of the European hotel market, just over two years on from the terrorist attacks which rocked the French capital, hotels in Paris have recovered well and returned to their rightful position as one of the top markets in the region.
The recovery in the performance of hotels in the French capital has been led by a return to the volume of business and leisure visitors to the city, which this month was illustrated by the 6.4-percentage point uplift in room occupancy, to 63.5%.
In addition, achieved average room rates at hotels in the French capital remain amongst the highest in Europe, reaching €350.66 in December, further to a 5.1% year-on-year increase. As a result, RevPAR at hotels in Paris increased by 16.7% this month, to €222.51.
Profit & Loss Key Performance Indicators – Paris (in EUR)
December 2017 v December 2016
RevPAR: +16.7% to €222.51
TrevPAR: +13.9% to €370.34
Payroll: -1.0 pts to 45.0%
GOPPAR: +63.5% to €82.56
As well as the strength of the contribution from Rooms Revenue, the revenue mix at hotels in Paris is supported by robust Non-Rooms Revenues, which comprised approximately 40% of total revenue in December. And with increases recorded across a number of ancillary departments, hotels in Paris successfully achieved a 13.9% increase in TrevPAR, to €370.34.
“Following a short period of uncertainty after the terrorist attacks in November 2015, Paris has reclaimed its position as a global hub, illustrated by the buzz in the French capital this month. This was not only due to the visitation of more than 50 world leaders for the One Planet Climate Summit, but also due to the recovery in the leisure segment, with Paris re-establishing its profile as an extremely popular Christmas destination,” said Pablo Alonso, CEO of HotStats.
Despite the strong top line performance, profit levels at hotels in Paris remain hampered by high Payroll levels, which, in spite of a 1.0-percentage point decline in December, remain high at 45.0% of total revenue.
As a result, profit conversion at hotels in the French capital are comparatively low at 22.3% of total revenue, but at €82.56 GOPPAR levels this month were 63.5% up on the same period in 2016.
In contrast to the performance of hotels in Paris, it was a tough end to a frustrating year for hotels in Rome, as revenue and profit levels fell away.
Whilst hotels in the Italian capital were able to record a 7.8% increase in achieved average room rate in December, to €193.72, it was completely wiped out by a 7.3-percentage point decline in room occupancy, to a lowly 46.1%. As a result, RevPAR at hotels in Rome fell by 7.0% year-on-year, to €89.32.
Profit & Loss Key Performance Indicators – Rome (in EUR)
December 2017 v December 2016
RevPAR: -7.0% to €89.32
TrevPAR: -7.9% to €151.37
Payroll: + 6.6 pts to 54.8%
GOPPAR: -27.4% to €7.72
The drop in volume meant that hotels in Rome were always going to struggle to maintain Non-Rooms Revenue levels, which fell by a considerable margin, including Food & Beverage (-10.2%) and Conference & Banqueting (-14.7%) on a per available room basis. The decline in these measures contributed to the 7.9% drop in TrevPAR, to €151.39.
In addition to declining revenue levels, profit levels were further hit by increasing costs, which were led by a 6.6-percentage point increase in Payroll, to 54.8% of total revenue.
As a result, GOPPAR at hotels in Rome fell by 27.4% in December to just €7.72. This is equivalent to a profit conversion of only 5.1% of total revenue.
“The Rome hotel market is heavily reliant on the leisure segment, which typically falls away during December, which always leaves revenue levels floundering. However, owners and operators in the Italian capital will be disappointed that rising costs have almost entirely wiped out profit levels this month,” added Pablo.
UK
December was a lacklustre end to a positive year for hotels in the UK, as a decline was recorded across all key metrics, including profit.
Despite recording a 1.0% increase in achieved average room rate in December, to £116.43, hotels in the UK suffered a 0.8-percentage point decline in room occupancy, to 70.3%, which forced a 0.1% decline in RevPAR, to £81.90.
And although hotels in the UK achieved an increase in Non-Rooms Revenues, including Conference & Banqueting (+0.4%) and Leisure (+1.3%) on a per available room basis, this growth was cancelled out by a 0.1% drop in Food & Beverage revenue, to £49.44 per available room.
As a result, this month, TrevPAR at hotels in the UK fell by 0.1% year-on-year, to £139.43.
Profit & Loss Key Performance Indicators – Total UK (in GBP)
December 2017 v December 2016
RevPAR: -0.1% to £81.90
TrevPAR: -0.1% to £139.43
Payroll: + 0.5 pts to 27.8%
GOPPAR: -0.3% to £53.00
The decline in TrevPAR was further exacerbated by rising costs, led by the 0.5 percentage point increase in Payroll, to 27.8% of total revenue, which were in spite of a 1.8% saving in ‘Overhead’ costs.
As a result, GOPPAR at hotels in the UK dropped by 0.3% to £53.00 in December, which is equivalent to a profit conversion of 38.0% of total revenue.
The limited year-on-year growth in revenues highlighted the marginality of the increases in profit being recorded at hotels in the UK on a departmental basis, with falling revenues and rising costs contributing to a drop in departmental profit in both the Rooms (-0.7%) and Food & Beverage (-3.9%) department, on a per available room basis.
“December is always a tough month of trading with the interruption of the Christmas break and whilst the performance at hotels in the UK this month will be somewhat of an anti-climax, owners and operators in the UK will be pleased that losses have been minimised and it has been a pretty positive year overall,” said Pablo Alonso, CEO of HotStats.
In contrast to the UK-wide trend, hotels in Bristol performed well in December, but leant heavily on third party intermediaries to achieve growth.
Hotels in the South West city recorded an 8.3% increase in RevPAR this month, to £55.73, which was entirely due to a 5.0-percentage point increase in room occupancy, to 64.8%, as achieved average room rate fell by 0.1%, to £85.97.
Profit & Loss Key Performance Indicators – Bristol (in GBP)
December 2017 v December 2016
RevPAR: +8.3% to £55.73
TrevPAR: +3.0% to £105.93
Payroll: -2.9 pts to 26.2%
GOPPAR: +2.9% to £36.49
However, the 23.1% year-on-year increase in Rooms Cost of Sales (ie the HotStats measure of Travel Agent’s Commissions, Reservation Fees, GDS Fees, Third Party Fees and Internet Booking Fees) suggests the proportion of demand sourced from third party sources increased significantly.
For December, Rooms Cost of Sales was recorded at £5.55 on a per available room basis, equivalent to approximately 9.9% of Rooms Revenue, which is a significant proportion.
As a result, and in spite of the strong RevPAR growth, on a conversion basis, the increase in Rooms departmental profit was marginal, at +0.3 percentage points to 66.1% of Rooms Revenue.
Despite the growth in Rooms Revenue, hotels in Bristol suffered declines in Non-Rooms departments, including Food & Beverage (-1.8%) and Conference & Banqueting (-8.5%) on a per available room basis, which contributed to TrevPAR growth shrinking to just 3.0% year-on-year, to £105.93.
However, cost savings, which included a 2.9-percentage point drop in Payroll to 26.2% of total revenue, meant astute Bristol hoteliers were able to record a 2.9% increase in profit per room, to £36.49.
Meanwhile, whilst hotels across a number of regional cities in the UK recorded punchy growth this month, properties in the capital struggled to keep up, recording a 3.3% decline in GOPPAR on the back of a 1.2% drop in TrevPAR.
Profit & Loss Key Performance Indicators – London (in GBP)
December 2017 v December 2016
RevPAR: -1.2% to £128.50
TrevPAR: -1.2% to £188.45
Payroll: +1.2 pts to 25.0%
GOPPAR: -3.3% to £83.83
RevPAR in December was challenged by falling room occupancy levels, which dropped by 1.3-percentage points, to 77.9% and cancelled out the 0.4% increase in achieved average room rate, to £164.94.
In addition to the drop in Rooms Revenue, falling Non-Rooms Revenues contributed to the overall picture of decline in December, as TrevPAR fell to £188.45.
“The London hotel market is heavily reliant on the commercial sector, which fell away, as always, towards the end of December as the Christmas holidays kicked in.
Furthermore, the room occupancy performance in the capital has been tested in 2017 by the addition of almost 5,800 bedrooms. This is an issue which is unlikely to go away anytime soon, with a further 10,000 rooms entering the market in 2018,” added Pablo.
Falling revenue levels in the capital were further exacerbated by increasing costs, which were led by a 1.2-percentage point increase in Payroll, to 25.0% of total revenue. As a result of the movement in revenue and costs, profit per room at hotels in London fell by 3.3% year-on-year in December, to £83.83, equivalent to a profit conversion of 44.5 per cent of total revenue.
USA
Despite recording one of the lowest GOPPAR levels of 2017, as demand from the commercial segment fell away during the holidays, hotels in the USA achieved one of the strongest year-on-year increases in profit per room this month.
Whilst RevPAR at hotels in the USA increased by 3.4-percent in December, to $128.29, which was due to a year-on-year increase in both room occupancy (+1.0-percentage points) and achieved average room rate (+1.0-percent) to $194.78, it was the lowest level recorded in 2017.
In addition to the growth in Rooms revenue, increases across other Non-Rooms departments in December, which included 1.2-percent increase in Food and Beverage Revenue, enabled hotels in the USA to maintain TrevPAR growth at 3.4-percent for the month, to $216.99.
However, the market mix for the month had a very different shape to it, as group and individual leisure demand grew to 27-per cent of accommodated roomnights, against the corporate and residential conference segments, which cumulatively fell to 29.4 per cent of total demand.
Profit & Loss Key Performance Indicators – USA (in USD)
December 2017 v December 2016
RevPAR: +3.4% to $128.29
TrevPAR: +3.4% to $216.99
Payroll: + 0.1 pts to 37.1%
GOPPAR: +12.7% to $69.49
Despite recording a 0.1-percentage point increase in Labor costs, to 37.1-percent of total revenue, hotels in the USA were able to successfully cut costs across a number of departments this month and as a result, profit per room increased by 12.7-percent to $69.49, the lowest level recorded in 2017. This was equivalent to a profit conversion of 32.0-percent of total revenue.
“Volume is always a struggle at this time of year as the holiday season kicks in and the market shifts towards a more leisure-oriented mix. Some locations are more successful at adapting to this shift than others, but this will ultimately have an impact on performance levels throughout the profit and loss for all markets.
That said, hotels in the USA have successfully managed to record a year-on-year increase across all measures, punctuating a good year of trading, which will no doubt satisfy hotel owners and operators,” said Pablo Alonso, CEO of HotStats.
On the west coast this month, top and bottom line growth was steady, with hotels in Los Angeles recording the stand out increase in profit per room, despite the continued incremental uplift in costs.
Profit & Loss Key Performance Indicators – Los Angeles (in USD)
December 2017 v December 2016
RevPAR: +4.5% to $131.51
TrevPAR: +5.1% to $200.45
Payroll: +2.2 pts to 44.6%
GOPPAR: +11.6% to $50.74
The 4.5-percent year-on-year uplift in RevPAR at hotels in Los Angeles in December was almost entirely fuelled by a 4.4-percent increase in achieved average room rate, to $179.30 and was in spite of room occupancy remaining stable at 73.3-percent.
Performance levels were further supported by growth across Non-Rooms departments, which contributed to the 5.1-percent increase in TrevPAR this month, to $200.45.
And despite Payroll levels creeping up to 44.6-percent of total revenue, cost cutting in other departments meant hotels in LA were able to record an 11.6-percent increase in GOPPAR, to $50.74, equivalent to a 25.3-percent profit conversion.
In line with the Los Angeles market, hotels in New York had a relatively strong month of performance. Buoyed by its profile as a destination for the holidays, room occupancy levels hit 90.6 per cent in December, which, coupled with a 0.2-percent increase in achieved average room rate, to $387.18, contributed to a 0.5-percent increase in RevPAR.
Whilst limited growth in Non-Rooms departments meant that TrevPAR at hotels in New York increased by just 0.3-percent, and year-on-year Labor costs increased by 2.3-percentage points (to 38.7-percent of total revenue), savings in other departments meant that hotels in the Big Apple recorded a 2.1-percent increase in profit per room, to $189.37.
Profit & Loss Key Performance Indicators – New York City (in USD)
December 2017 v December 2016
RevPAR: +0.5% to $350.67
TrevPAR: +0.3% to $474.49
Payroll: +2.3 pts to 38.7%
GOPPAR: +2.1% to $189.37
In contrast to the performance of hotels in the Los Angeles and New York City markets, profit performance at properties in Washington DC plummeted to an annual low this month, which was, in part, fuelled by the fall in demand as congress broke for the holidays midway through December.
The challenging month of performance was led by a 3.8-percentage point drop in room occupancy, to 62.3-percent, well below typical volume levels for the year. The drop in room occupancy was further exacerbated by falling average room rate, which fell by 2.7-percent for the month, to $178.22, and contributed to the 8.2-percent decline in RevPAR, to $111.05.
In addition to the falling revenue levels, escalating costs in the capital impacted profit levels, which was exemplified by the 4.8-percentage point increase in Labor costs, to a lofty 53.9-percent of total revenue.
As a result, profit per room at hotels in Washington DC fell by 29.7-percent year-on-year in December, to $23.65, equivalent to a profit conversion of just 12.8-percent of total revenue.
Profit & Loss Key Performance Indicators – Washington DC (in USD)
December 2017 v December 2016
RevPAR: -8.2% to $111.05
TrevPAR: -8.9% to $184.74
Payroll: +4.8 pts to 52.9%
GOPPAR: +29.7% to $23.65
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.
