MIDDLE EAST & AFRICA
Despite successfully recording growth across a number of revenue departments this month, hotels in the Middle East and Africa suffered a 1.8% year-on-year drop in GOPPAR, which was primarily as a result of weakening achieved average room rate, according to the latest worldwide poll of full-service hotels from HotStats.
Whilst hotels in the Middle East & Africa effectively recorded a 2.3-percentage point increase in room occupancy in November, to 71.6%, which was the second highest occupancy recorded in the region in 2017, this was completely cancelled out by a 4.7% decline in achieved average room rate, to $188.53.
As a result, RevPAR for hotels in the Middle East & Africa fell by 1.4% to $135.08 in November. The challenges to average room rate in the region meant this was the fifth month of the year in which RevPAR has fallen, contributing to the 1.8% drop in this measure in the 11 months to November 2017, to $114.99.
In contrast to the decline in Rooms Revenue, hotels in the Middle East & Africa achieved growth in Non-Rooms Revenues, including Food & Beverage (+2.2%), which contributed to TrevPAR movement being reduced to a marginal -0.2% decline, to $232.53.
Profit & Loss Key Performance Indicators – Middle East & Africa (in USD)
November 2017 v November 2016
RevPAR: -1.4% to $135.08
TrevPAR: -0.2% to $232.53
Payroll: +0.9 pts to 24.5%
GOPPAR: -1.8% to $99.28
In addition to the drop in revenue, profit levels were further depleted by cost increases, which included a 0.9-percentage point uplift in Payroll, to 24.5% of total revenue. The rising costs contributed to the 1.8% decline in GOPPAR at hotels in the Middle East & Africa.
Despite the year-on-year decline, at $99.28 in November, profit per room at hotels in the Middle East & Africa was the second highest recorded in 2017 and the GOPPAR achieved at hotels in the region in November was equivalent to a profit conversion of a punchy 42.7% of total revenue. This was 35.5% above the year-to-date GOPPAR for the region, at $73.14.
“November is typically a strong month of performance for hotels in the Middle East & Africa and this month was almost entirely fuelled by North Africa and particularly ‘winter sun’ resorts, including Tunisia and Egypt.
In contrast, economic challenges borne out of the oil crisis continued to take their toll on performance levels at hotels in the Middle East. Even the biennial Dubai Air Show failed to make a material difference to performance for hotels in the UAE capital, despite a 20% increase in trade visitors to the show,” said Pablo Alonso, CEO of HotStats.
For hotels in Alexandria, November marked another positive month of top and bottom line growth for hotels in the Mediterranean city, which is leading the recovery of tourist destinations in Egypt in 2017.
Profit & Loss Key Performance Indicators – Alexandria (in USD)
November 2017 v November 2016
RevPAR: +18.1% to $45.05
TrevPAR: +16.6% to $66.55
Payroll: -2.0 pts to 18.0%
GOPPAR: +10.5% to $25.78
The 18.1% RevPAR increase at hotels in Alexandria was due to a 4.4-percentage point increase in room occupancy, to 68.4%, in addition to a 10.4% increase in achieved average room rate, to $65.82.
The growth this month contributed to the 66.2% increase in RevPAR for the 11 months to November 2017, to $49.35, an uplift of approximately $20 from the same period in 2016 ($29.70), albeit from a very low base.
Furthermore, hotels in Alexandria successfully recorded a 16.6% increase in TrevPAR in November, which was due to the growth in RevPAR, as well as increases in Non-Rooms Revenues, including a 12.9% increase in Food & Beverage Revenue, to $19.41 per available room.
The considerable growth in top line revenues meant that Payroll levels for hotels in Alexandria fell by 2.0 percentage points to a lowly 18.0% of total revenue this month, contributing to the 10.5% increase in GOPPAR to $25.78.
“The tourism industry in North Africa has been reeling from political uncertainty and terrorist attacks since 2011 and Alexandria in particular was the victim of a deadly attack on one of its churches, but its resorts are now starting to claw back their losses as confidence in Egypt as a tourism destination returns.
This will be welcome news for hotel owners and operators in the region which have seen performance levels plummet to record lows in recent years, but hopefully they are now back on the road to full recovery,” added Pablo.
Whilst the performance in Alexandria was representative of the positive performance for properties across North Africa, in stark contrast, hotels in Amman suffered declines in top and bottom line performance as the region wrestles with rate.
Despite hotels in Amman successfully recording a 0.1-percentage point increase in room occupancy in November, to 58.8%, this was more than cancelled out by a 6.0% decline in achieved average room rate, to $136.35 and as a result, RevPAR dropped by 5.9% to $80.13.
Profit & Loss Key Performance Indicators – Amman (in USD)
November 2017 v November 2016
RevPAR: -5.9% to $80.13
TrevPAR: -6.8% to $128.32
Payroll: +4.5 pts to 33.6%
GOPPAR: -16.3% to $33.38
In addition, hotels in Amman suffered declines in Non-Rooms Revenues, including Food & Beverage (-11.1%) and Conference & Banqueting (-12.9%), which contributed to the 6.8% drop in TrevPAR, to $128.32.
The decline in revenue levels was further exacerbated by rising costs, which included a 4.5-percentage point increase in Payroll, to 33.6% of total revenue. As a result, GOPPAR at hotels in Amman fell by 16.3% year-on-year to $33.38 for the month of November.
On a rolling 12-month basis, profit per room at hotels in Amman has almost halved since the oil crisis began, falling to $32.07 in the 12 months to November 2017, from $61.52 during the same period in 2013/14.
EUROPE
The robust performance of hotels in Europe continued in November with a 9.6% increase recorded in GOPPAR, but somewhat ironically, profit levels at hotels in Germany are being challenged by buoyant economic conditions.
In addition to a 0.7 percentage point increase in room occupancy in November, hotels in Europe benefited from a 4.4% increase in achieved average room rate, to €146.12, which contributed to a 5.6% year-on-year increase in RevPAR, to €101.43.
The growth in Rooms Revenue was supported by increases in Non-Rooms Revenues, including Food & Beverage (+3.9%), Conference & Banqueting (+4.9%) and Leisure (+1.0%), on a per available room basis, which contributed to the 4.8% increase in TrevPAR, to €164.41.
The steady top line growth at hotels in Europe remains led by a balanced base of demand, illustrated by the year-on-year increase in achieved rate in the Residential Conference (+7.2%), Corporate (+7.0%) and Individual Leisure (+9.5%) segments.
Profit & Loss Key Performance Indicators – Europe (in EUR)
November 2017 v November 2016
RevPAR: +5.6% to €101.43
TrevPAR: +4.8% to €164.41
Payroll: -0.4 pts to 35.8%
GOPPAR: +9.6% to €50.26
The year-on-year TrevPAR growth for hotels in Europe was further buoyed by a reduction in costs, which included a 0.4 percentage point saving in Payroll to 35.8% of total revenue, which helped hotels in the region to record a 9.6% increase in GOPPAR, to €50.26. This was equivalent to a profit conversion of 30.6% of total revenue.
In contrast to the positive performance across Europe, hotels in key German cities struggled to grow profit in November as buoyant conditions in the largest economy in the region fuelled an increase in costs.
In Frankfurt, hotels had a positive month of top line performance in November, recording a 7.9% increase in RevPAR, which was due to year-on-year growth in both room occupancy (+0.4-percentage points), to 79.0%, and achieved average room rate (+7.3%), to €151.83.
But despite increases in some Non-Rooms Revenue departments, which included an increase in Food & Beverage (+4.3%) and Conference & Banqueting (+3.2%), TrevPAR growth was slight at just 0.7%.
Profit & Loss Key Performance Indicators – Frankfurt (in EUR)
November 2017 v November 2016
RevPAR: +7.9% to €119.97
TrevPAR: +0.7% to €182.20
Payroll: +1.6 pts to 29.0%
GOPPAR: -6.0% to €71.77
Furthermore, the marginal total revenue growth was cancelled out by escalating costs, which included a 1.6 percentage point increase in Payroll, to 29.0% of total revenue.
In addition, significant year-on-year increases were also recorded in Cost of Sales in Rooms (+18.2%), Food (+10.3%) and Beverage (+11.3%), as well as Overheads (+4.8%), on a per available room basis.
As a result of spiralling costs, GOPPAR at hotels in Frankfurt in November fell by 6.0% to €71.77. This was equivalent to a 2.8-percentage point decline in profit conversion, but remains punchy at 39.4% of total revenue.
Despite the challenges to costs, 2017 has been a good year for hotels in Frankfurt, supported by several months of exceptional growth as a result of events hosted in the city, including the IAA Motor Show, which attracted approximately 810,000 visitors across eleven days in September.
As a result, and in spite of the decline this month, in the 11 months to November 2017 hotels in Frankfurt have recorded a 5.8% increase in GOPPAR, to €58.80, equivalent to a profit conversion of 36.3% of total revenue.
“Frankfurt remains a robust hotel market, underpinned by corporate travel and a strong MICE market and has been further buoyed by the expansion of the Messegelände in 2016. Furthermore, top line performance at hotels in Frankfurt has remained strong, in site of significant additions to stock in the last 18 months.
However, payroll costs are on the rise as the jobless rate in Germany is at a record low and a 4% increase in minimum wage was implemented in January 2017. Additionally, inflation rates in Germany are at their highest level since 2013, which is driving up Cost of Sales,” said Pablo Alonso, CEO of HotStats.
For hotels in Berlin, in spite of achieving a record high in overnight stays in 2016, significant additions to hotel stock are diluting demand levels, which is impacting revenue and profit levels at properties in the German capital.
November represented one of the most significant year-on-year declines in room occupancy in 2017 at hotels polled, dropping by 6.2 percentage points, to 75.8%. In addition, hotels in Berlin recorded a 1.7% drop in achieved average room rate, to €141.03, which contributed to the 9.1% drop in RevPAR, to €106.91.
With such a significant drop in volume, a decline in other revenue departments was inevitable, and as a result, TrevPAR at hotels in Berlin fell by 10.5% in November, to €180.09.
Profit & Loss Key Performance Indicators – Berlin (in EUR)
November 2017 v November 2016
RevPAR: -9.1% to €106.91
TrevPAR: -10.5% to €180.09
Payroll: – 3.9 pts to 31.7%
GOPPAR: -21.3% to €55.52
In addition to declining revenue levels, profit levels were further depleted by increasing costs, which were led by a 3.9-percentage point increase in Payroll, to 31.7% of total revenue.
As a result, GOPPAR at hotels in Berlin fell by 21.3% in November to €55.52. This is equivalent to a profit conversion of 30.8%, and 4.2 percentage points below the same period in 2016, at 39.2%.
UK
Despite recording a 0.6% increase in Total Revenue in November, profit per room at hotels in the UK fell by 1.1% due to escalating costs.
Growth in revenue levels was marginal this month, led by a 0.5% increase in RevPAR, to £91.46. The increase in RevPAR was in spite of a 0.6-percentage point decline in room occupancy, to 78.5%, which was offset by a 1.3% increase in achieved average room rate, to £116.56.
In addition, year-on-year growth in Non-Rooms Revenues was limited, at just 0.9% in the Food and Beverage department, with growth also recorded in Conference and Banqueting (+2.6%) and Leisure (+3.0%), on a per available room basis.
As a result of the movement in all revenue departments in November, TrevPAR at hotels in the UK increased by 0.6% to £145.68, which was 5.1% above the year-to-date performance in this measure, at £138.61.
Profit & Loss Key Performance Indicators – Total UK (in GBP)
November 2017 v November 2016
RevPAR: +0.5% to £91.46
TrevPAR: +0.6% to £145.68
Payroll: + 1.0 pts to 27.6%
GOPPAR: -1.1% to £55.80
However, the minimal growth in TrevPAR was cancelled out by rising costs, which primarily included a 1.0 percentage point increase in Payroll, to 27.6% of total revenue.
Profit levels were also hit by a 0.7% year-on-year increase in ‘Overhead’ costs, including Property & Maintenance Expenses (+4.0%) and Utilities (+1.7%), on a per available room basis.
As a result of the movement in revenue and cost, GOPPAR at hotels in the UK dropped by 1.1% to £55.80 in November, which is equivalent to a profit conversion of 38.3% of total revenue.
“It is months like this which really highlight how revenue growth can mask the underlying pressures which are impacting profit. Rising costs will be an issue for hoteliers into 2018; a 4.4 per cent rise in the National Living Wage, increases in Pension contributions and food, beverage and energy price rises will take their toll on UK hotel profitability.
With a limit on how much hoteliers can seek to uplift revenues, they will need to focus on cost management and productivity improvement to deliver increased bottom line profit and, therefore, preserve or grow capital values”said Pablo Alonso, CEO of HotStats.
In contrast to the performance of hotels across the UK, properties in York were able to convert a minimal top line increase into considerable bottom line growth with cost savings across all departments.
Despite recording a 0.1-percentage point decline in room occupancy in November, to 79.6%, hotels in York achieved a 2.5% increase in RevPAR, thanks to a 2.7% increase in average room rate, to £94.14.
Profit & Loss Key Performance Indicators – York (in GBP)
November 2017 v November 2016
RevPAR: +2.5% to £74.90
TrevPAR: +2.3% to £119.08
Payroll: – 1.4 pts to 29.8%
GOPPAR: +14.1% to £38.97
In addition to the growth in Rooms Revenue, hotels in York recorded a mixed performance in Non-Rooms Departments, which included a 0.8% increase in Food & Beverage, but a 5.1% decline in Conference & Banqueting Revenue, on a per available room basis. Despite this, TrevPAR at hotels in York increased by 2.3%, to £119.08.
Furthermore, amongst other cost savings, a 1.4-percentage point drop in Payroll to 29.8% of total revenue, enabled properties in the medieval city to record a 14.1% increase in profit per room, to £38.97.
The 3.4-percentage point increase in profit conversion this month, to 32.7% of total revenue, represents a significant increase in the bottom line for hotel owners and operators in York.
“Hotels in York have bucked the trend and been one of few markets to record a reduction in payroll costs this month. This is not always possible in leisure-led markets, particularly in the quieter shoulder months, but York’s hoteliers should be applauded for their ability to leverage a strong profit performance from a relatively limited revenue increase due to highly efficient cost management,” added Pablo.
In stark contrast to the performance of York, another of the UK’s finest tourist destinations, Stratford-upon-Avon, did not fare so well this month, recording a 15.0% year-on-year decline in profit per room.
The strength of the visitor proposition in Stratford-upon-Avon means performance peaks during the summer months, as the market mix is dominated by demand from the leisure segment. Conversely, the absence of a solid commercial base means the volume of demand drops during the typical ‘off season’ illustrated by room occupancy levels plummeting to just 64.9% in November. This is 13.6 percentage points behind the average for the UK this month, at 78.5%.
In addition to the decline in occupancy, a 0.2% drop in average room rate contributed to the 4.8% decline in RevPAR, to £52.43. And despite Non-Rooms Revenues comprising approximately 48% of Total Revenue this month, TrevPAR at hotels in Stratford-upon-Avon fell by 2.6%, to £100.72.
Profit & Loss Key Performance Indicators – Stratford-upon-Avon (in GBP)
November 2017 v November 2016
RevPAR: -4.8% to £52.43
TrevPAR: -2.6% to £100.72
Payroll: +3.8 pts to 39.7%
GOPPAR: -15.0% to £20.83
The falling revenue levels were further exacerbated by rising costs, which were led by a 3.8 percentage point increase in Payroll, to a lofty 39.7% of total revenue.
As a result, profit per room at hotels in Stratford-upon-Avon fell to just £20.83 in November, equivalent to a profit conversion of just 20.7% of total revenue and further illustrating the challenging trading conditions for hotels in the city outside of the bustling summer months.
USA
Hotels in the USA recorded a 5.3-percent increase in GOPPAR this month, which was in spite of an uplift in costs, which included a 9.5-percent increase in Labor, according to the latest worldwide poll of full-service hotels from HotStats.
The year-on-year increase in RevPAR at hotels in the USA was steady this month, with growth recorded in both room occupancy (+1.3-percentage points), to 74.8-percent, as well as achieved average room rate (+1.7-percent), to $201.52.
Increases in Non-Rooms Revenues, which included Food and Beverage (+3.7-percent) and Conference and Banqueting (+4.0-percent), in addition to the 3.5-percent increase in Rooms Revenue, contributed to the 4.1-percent year-on-year increase in TrevPAR, to $246.81.
Although the year-on-year growth painted a positive picture of performance this month, TrevPAR levels were approximately $36 behind the performance in October, further highlighting that month’s stand-out performance, but were also 2.3-percent behind the year-to-date performance for hotels in the USA, at $252.42.
Profit & Loss Key Performance Indicators – USA (in USD)
November 2017 v November 2016
RevPAR: +3.5% to $150.76
TrevPAR: +4.1% to $246.81
Payroll: + 1.8 pts to 35.8%
GOPPAR: +5.3% to $87.68
Whilst Payroll levels continued their upward trajectory this month, recording a 1.8-percentage point year-on-year increase to 35.8-percent of total revenue, this was outweighed by the comfortable top line growth and enabled hotels in the USA to record a profit per room increase of 5.3-percent to $87.68. This was equivalent to a profit conversion of 35.5-percent.
The growth in profit this month was also in spite of a 2.3-percent year-on-year increase in ‘Overhead’ costs, including Sales & Marketing (+3.7-percent) and Utilities (+8.3-percent), on a per available room basis.
“November is always a challenging month of trading for hotels in the USA due to the timing of Thanksgiving and many people taking vacation time to spend with family around this period. Despite this, hotels in the USA have managed to maintain their upward trajectory to good effect this month.
With a steady increase in top and bottom line performance so far in 2017, hotels in the USA are on target for a third consecutive year of profit growth,” said Pablo Alonso, CEO of HotStats.
One of the stand-out performances this month was in San Francisco, as hotels recorded a 20.4-percent year-on-year increase in GOPPAR to $96.41, which was primarily as a result of accommodation demand generated by the 2017 Dreamforce conference.
Profit & Loss Key Performance Indicators – San Francisco (in USD)
November 2017 v November 2016
RevPAR: +9.8% to $216.73
TrevPAR: +8.2% to $299.05
Payroll: +1.0 pts to 43.2%
GOPPAR: +20.4% to $96.41
Whilst hotels in San Francisco suffered a 3.4-percentage point drop in room occupancy this month, to 80.1-percent, this was more than offset by the 14.4-percent increase in achieved average room rate, to $270.59, which helped drive a 9.8-percent increase in RevPAR, to $216.33.
Rate growth was achieved across most segments in November, with the greatest margin of increase recorded in the Best Available Rate (+24.7-percent), Residential Conference (+20.4-percent) and Leisure (+11.4-percent) segments.
In addition to the growth in RevPAR, increases were also recorded in Food and Beverage (+5.9-percent) and Conference and Banqueting (+5.3-percent) revenues on a per available room basis, which helped fuel the 8.2-percent increase in TrevPAR, to $299.05.
“The four-day Dreamforce event, is the biggest software conference in the world and reportedly had more than 171,000 registered ‘Trailblazers’ from 91 countries, fuelling demand for hotel accommodation across the city.
Although the Moscone Center in San Francisco has been the home of the event for some years now, this year the timing of the conference shifted to November from October in 2016, which had a significant impact on the year-on-year performance of hotels in the city this month,” added Pablo.
Despite the strong total revenue growth, Payroll levels at hotels in San Francisco increased by 1.0-percentage points this month, to 43.2-percent of total revenue. This was equivalent to a 10.8-percent year-on-year increase on a per available room basis, highlighting the challenges of Labor costs in the Bay City.
As a result of rising costs outpacing revenue growth, profit per room at hotels in San Francisco for year-to-date 2017 remains 6.1-percent behind the same period in 2016, at $119.17.
2017 has also been a challenging year so far for hotels in Philadelphia. After a strong start, hotels in Pennsylvania’s largest city faced tough trading over the summer, as year-on-year profit per room plummeted by 25.0-percent in the period from June to September.
Whilst November provided some respite, top line performance at hotels in Philadelphia has been challenged throughout 2017 by declining average room rate, which has dropped by 3.2-percent year-to-date, with the rate in the corporate segment providing the biggest challenge, as it has plummeted by 23.2-percent in the 11 months to November 2017.
Furthermore, in line with the trend across hotels in the USA, profit levels at properties in Philadelphia are being challenged by Labor costs, which have increased by 2.2-percentage points year-to-date, to 33.8-percent of total revenue.
As a result, profit per room for year-to-date 2017, at $94.94, remains 3.6-percent behind the same period in 2016, at $98.53.
Profit & Loss Key Performance Indicators – Philadelphia (in USD)
November 2017 v November 2016
RevPAR: +3.5% to $185.44
TrevPAR: +2.4% to $262.58
Payroll: +0.9 pts to 32.3%
GOPPAR: +6.7% to $105.36
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.
