MENA
Whilst hotels in the Middle East and Africa successfully recorded a 1.9% year-on-year increase in GOPPAR this month, the periods of decline recorded across 2017 threaten to undermine the positive months of performance, according to the latest worldwide poll of full-service hotels from HotStats.
This month, a 3.1% decline in achieved average room rate, to $178.09, was more than offset by a 4.8-percentage point increase in room occupancy, to 68.5%, which underpinned the 4.1% increase in RevPAR, to $121.96.
In addition to the growth in Rooms Revenue, hotels in the Middle East & Africa recorded increases in non-rooms revenues this month, including Food and Beverage (+1.4%) and Conference and Banqueting (+1.2%), which contributed to the 2.7% increase in TrevPAR, to $208.13.
However, challenges remain in the economy of the Middle East & Africa, particularly in the oil exporting countries, which has impacted trading performance in the medium-term. This is not only illustrated in the achieved average room rate in the region, which has fallen by more than $22 over the last 36 months, but in revenue from other departments, which have dropped by approximately 16% during the same period, to $86.17 in the 12 months to October 2017.
Profit & Loss Key Performance Indicators – Middle East & Africa (in USD)
October 2017 v October 2016
RevPAR: +4.1% to $121.96
TrevPAR: +2.7% to $208.13
Payroll: +0.4 pts to 25.9%
GOPPAR: +1.9% to $81.42
Despite a 0.4-percentage point increase in Payroll, to 25.9% of total revenue, hotels in Middle East & Africa achieved a GOPPAR increase of 1.9% to €81.42 in October. This is equivalent to a profit conversion of 39.1% of total revenue.
In spite of this month’s increase, year-to-date GOPPAR levels at hotels in the region remain 5.9% behind the same period in 2016, at $70.51. And, at $74.77 in the 12 months to October 2017, profit per room has dropped by almost 30% in the last 36 months.
“The rollercoaster performance of hotels in the Middle East & Africa continued in October. Although hotels in the region have successfully recorded six months of year-on-year profit per room growth in 2017, the remaining five months have seen GOPPAR levels declining at a more rapid rate. As a result, it is hard to see hotels in the region recording a positive outcome for the year,” said Pablo Alonso, CEO of HotStats.
Hotels in Beirut seem less impacted by the issues facing the rest of the region, with a growing economy, led by an elevated tourism proposition driving a strong month of trading.
Profit & Loss Key Performance Indicators – Beirut (in USD)
October 2017 v October 2016
RevPAR: +20.7% to $80.67
TrevPAR: +17.7% to $112.71
Payroll: -4.8 pts to 36.3%
GOPPAR: +70.9% to $26.20
For hotels in Beirut, a 20.7% year-on-year increase in RevPAR was driven by an 8.6-percentage point increase in room occupancy, to 69.5%, in addition to a 5.7% increase in achieved average room rate, to $116.00.
This month, the achieved rate at hotels in Beirut was driven by a 28.7% year-on-year increase in rate in the leisure segment, to $146.18 in October, contributing to the year-to-date increase of 9.9% to $136.59. This is well ahead of the achieved rate in the corporate ($89.28) and residential conference ($64.46) segments, illustrating the strength of tourism to the city.
In addition to the growth in Rooms Revenue, an 11.0% increase in Other Revenues helped hotels in Beirut record a 17.7% increase in TrevPAR, to $112.71.
The considerable growth in top line revenues meant that Payroll levels for hotels in Beirut fell by 4.8 percentage points to 36.3% of total revenue this month, contributing to the 70.9% increase in GOPPAR to $26.20, albeit from a very low base of just $15.33 during the same period in 2016.
Whilst this was a very positive month of performance for hotels in Beirut, there is still room for improvement, with GOPPAR conversion recorded at just 23.2% of total revenue.
“The Lebanon economy is driven by the service sector and tourism in particular. In the first five months of the year, the number of tourist arrivals increased by 12.8% year-on-year. And with the recent election of President Aoun and subsequent formation of a unity government, this should mark the beginning of a period of stability for Lebanon, which will be positive for its hotels,” added Pablo.
In contrast to the positive performance of hotels in Beirut in October, properties in Manama had a month of mixed results.
Whilst hotels in the capital of Bahrain successfully recorded a 1.3-percentage point increase in room occupancy, to 51.6%, this was not sufficient to offset a 3.8% drop in achieved average room rate, to $162.28, and RevPAR fell by 1.3% this month, to $83.76.
Profit & Loss Key Performance Indicators – Manama (in USD)
October 2017 v October 2016
RevPAR: -1.3% to $83.76
TrevPAR: -3.1% to $136.21
Payroll: -0.4 pts to 34.8%
GOPPAR: +4.0% to $33.07
Further declines were recorded in non-rooms revenues, including Food and Beverage (-5.1%), which contributed to the 3.1% drop in TrevPAR, to $136.21.
However, the drop in revenue was overturned with cost cutting, which included a 0.4 percentage point saving in Payroll, to 34.8% of total revenue, enabling hotels in Manama to record a 4.0% increase in profit per room, to $33.07.
Despite the efforts of hoteliers in Manama this month, GOPPAR for year-to-date 2017 fell by 7.7%, to $42.52.
EUROPE
Hotels in Central and Eastern Europe led the way in another bumper month of GOPPAR growth for hotels across Europe, which contributed to the ongoing positive performance levels for the region for year-to-date 2017.
Across the region, RevPAR growth was once again boosted by year-on-year increases in achieved average room rate, which grew by 4.8% year-on-year to €165.28, with growth also recorded in room occupancy, but at a more muted 0.5-percentage points, to 76.6% for the month.
The current confidence of the business sector is reflected in the growth in commercial segment rates for hotels across Europe, which included year-on-year increases in the residential conference (+2.3%) and corporate (+8.0%) segment.
Furthermore, increases in the individual leisure (+12.0%) and group leisure (+12.1%) rates, illustrates the current rude health of the tourism industry across the region.
The movement in occupancy and achieved average room rate contributed to the 5.5% increase in RevPAR, to €126.61. In addition, an increase in Non-Rooms Revenue, including Food and Beverage (+3.7%) and Conference and Banqueting (+6.4%), contributed to the 5.0% increase in TrevPAR, to €192.60, which maintained the upward trajectory in this measure for year-to-date 2017.
Profit & Loss Key Performance Indicators – Europe (in EUR)
October 2017 v October 2016
RevPAR: +5.5% to €126.61
TrevPAR: +5.0% to €192.60
Payroll: -0.3 pts to 30.4%
GOPPAR: +7.2% to €75.58
The year-on-year growth in TrevPAR was further buoyed by a reduction in costs, which included a 0.3 percentage point saving in Payroll to 30.4% of total revenue, which helped hotels in Europe record a 7.2% increase in GOPPAR, to €75.58. This was equivalent to a profit conversion of 39.2% of total revenue.
According to the European commission president, Jean-Claude Juncker, the benefits of structural reform implemented in the wake of the global financial crisis are finally coming to fruition. Europe’s economy is now booming, fuelling business and leisure tourism across the region and this is great news for hoteliers.
Whilst Juncker has cited the EU’s newfound unity after Britain’s vote to leave as being a catalyst for the economic recovery, it is more likely due to the stand out performance of countries in the CEE, which is reflected in the health of their hotel industry,” said Pablo Alonso, CEO of HotStats.
For hotels in Prague, an 11.1% year-on-year increase in RevPAR this month was fuelled by a 3.8 percentage point increase in room occupancy, to a lofty 89.0%, as well as a 6.3% increase in achieved average room rate to €114.04.
Profit & Loss Key Performance Indicators – Prague (in EUR)
October 2017 v October 2016
RevPAR: +11.1% to €101.51
TrevPAR: +10.7% to €155.46
Payroll: +0.1 pts to 19.4%
GOPPAR: +13.5% to €79.97
In addition to the growth in Rooms Revenue this month, increases in Other Revenue enabled hotels to record a 10.7% increase in TrevPAR, to €155.46.
And despite a 0.1 percentage point increase in Payroll, to a meagre 19.4% of total revenue, hotels in the capital of the Czech Republic achieved a GOPPAR increase of 13.5% to €79.97. This is equivalent to a profit conversion of 47.7% of total revenue.
“Economic growth in the Czech Republic is expected to reach 4.3% in 2017, up from 2.4% in 2016 Furthermore, according to Prague City Tourism, for the year to September 2017, the number of overnight stays at hotels in Prague increased by 7.2% year-on-year.
Whilst the increase in international visitors was recorded at +6.8%, domestic visitation was up by +11.1%, illustrating the high disposable income levels and propensity to travel of the Czech population, which, again, is extremely positive for Prague hotels,” added Pablo.
For hotels in Warsaw, top and bottom line performance at city hotels was driven by key events at the Warsaw Expo, including approximately 160,000 visitors to the Warsaw Moto Show and over 45,600 visitors to the World Travel Show.
As a result of the high demand levels, hotels in the Polish capital were able to record an 11.5% increase in achieved average room rate, to €118.90, which offset the 0.7 percentage point decline in room occupancy, to 81.4%.
Profit & Loss Key Performance Indicators – Warsaw (in EUR)
October 2017 v October 2016
RevPAR: +10.6% to €96.81
TrevPAR: +9.6% to €146.98
Payroll: – 1.2 pts to 20.8%
GOPPAR: +13.3% to €71.74
The 10.6% year-on-year growth in Rooms Revenue contributed to the 9.6% increase in TrevPAR. And in line with hotels in Prague, which record some of the lowest labour levels of all hotel markets across Europe, Payroll at hotels in Warsaw fell by 1.2 percentage points, to just 20.8% of total revenue.
For hotels in the Polish capital, the 13.3% year-on-year increase in profit per room in October contributed to the 9.9% year-to-date increase in GOPPAR and means hotels in Warsaw are on course for another great year of bottom line growth in 2017 following the increases in 2015 (+5.4%) and 2016 (+11.7%).
UK
Hotels in the UK maintained their upward trajectory in GOPPAR growth this month, but the marginal gains in revenue were almost entirely wiped out by increasing costs which led to a decline in profit conversion.
Hotels in the UK achieved a 2.1% increase in RevPAR this month, to £94.20, which was due to a 2.4% increase in achieved average room rate, to £116.11 and in spite of a 0.3 percentage point decline in room occupancy, to 81.1%.
Furthermore, the year-on-year growth in Rooms Revenue for hotels in the UK was supported by increases in Non-Rooms Departments, including Food and Beverage (+1.1%), Conference and Banqueting (+4.9%) and Leisure (+2.4%), on a per available room basis, contributing to the 1.8% year-on-year increase in TrevPAR this month, to £145.57.
Profit & Loss Key Performance Indicators – Total UK (in GBP)
October 2017 v October 2016
RevPAR: +2.1% to £94.20
TrevPAR: +1.8% to £145.57
Payroll: + 0.4 pts to 26.6%
GOPPAR: +1.1% to £58.77
However, the marginal levels of revenue growth in October have been outpaced by increasing costs, leading to a decline in profit conversion across a number of departments.
This has included the Food and Beverage Department, for which profit conversion dropped by 1.2 percentage points to 34.8% of Departmental Revenue, as a result of increases in Cost of Sales in Food (+1.2%) and Beverage (+0.8%), as well as Payroll (+4.3%) on a per available room basis.
That said, in spite of a 0.4 percentage point increase in Payroll, to 26.6% of total revenue, hotels in the UK recorded a 1.1% increase in GOPPAR to £58.77 in October. This is equivalent to a profit conversion of 40.4% of total revenue, a 0.3 percentage point decline, from 40.7% during the same period in 2016.
“According to the Bank of England, official data showed consumer prices increased by three per cent in the year to October 2017, the highest level in five years, led by growth in food prices and fuel costs.
Whilst 2017 is shaping up to be another positive year of revenue and profit performance for hotels in the UK, owners and operators will do well to monitor any further increases in food prices, and indeed other costs, which could challenge profitability levels in 2018,” said Pablo Alonso, CEO of HotStats.
Hotels in Manchester led the way in October as the city’s hoteliers welcomed approximately 12,000 delegates to the four-day Conservative Party Conference.
Profit & Loss Key Performance Indicators – Manchester (in GBP)
October 2017 v October 2016
RevPAR: +12.4% to £93.16
TrevPAR: +13.8% to £147.50
Payroll: – 1.5 pts to 22.9%
GOPPAR: +19.6% to £61.62
In addition to a 3.2 percentage point increase in room occupancy, to 87.5%, hotels in Manchester recorded an 8.4% increase in achieved average room rate, to £106.47, which contributed to a RevPAR peak for 2017 being achieved at £93.16.
The additional demand associated with the conference’s biannual visit to Manchester also enabled hotels to drive associated non-rooms revenues, which included a 14.7% increase in Food and Beverage Revenue and a 33.8% increase in Conference and Banqueting Revenue, on a per available room basis.
The 13.8% increase in TrevPAR, in addition to a 1.5 percentage point saving in payroll, to a lean 22.9% of total revenue, helped Manchester hotels record a 19.6% year-on-year increase in GOPPAR in October, to £61.62. This was the highest profit per room recorded in the Manchester hotel market in 2017 and equivalent to a profit conversion of 41.8% of total revenue.
“Unlike Mrs May, who stumbled through her speech and was the victim of a number of unfortunate mishaps, Manchester hoteliers enjoyed the 2017 Conservative party conference as the buoyant demand levels enabled top and bottom line performance levels to soar,” added Pablo.
At the other end of the M62, hotel performance was less inspiring, as properties in Leeds continued to suffer a decline in bottom line performance, in spite of top line increases.
Profit & Loss Key Performance Indicators – Leeds (in GBP)
October 2017 v October 2016
RevPAR: +0.8% to £66.55
TrevPAR: +0.6% to £114.43
Payroll: -0.3 pts to 27.7%
GOPPAR: -1.3% to £41.05
The 0.8% increase in RevPAR at hotels in Leeds was due to a 2.0% increase in achieved average room rate, to £81.16, which offset the -1.0-percentage point decline in room occupancy, to 82.0%.
The achieved average room rate increase at hotels in Leeds this month was fuelled by the commercial segment, with growth recorded in the achieved rate in both the corporate (+3.8%) and residential conference (+5.7%) segments.
Despite a 0.3 percentage point saving in Payroll, to 27.7% of total revenue, a muted TrevPAR increase of just 0.6%, to £114.43 was wiped out by increases in overheads. As a result, profit per room at hotels in Leeds fell by 1.3% to £41.05.
This continued the challenging trend for the year so far at Leeds hotels, which have recorded a 4.0% decline in GOPPAR for year-to-date 2017, despite a 0.5% increase in TrevPAR.
USA
Profit levels at hotels in the USA hit a 2017 high of $135.08 per available room this month, fuelled by year-on-year growth across all revenue departments, according to the latest worldwide poll of full-service hotels from HotStats.
Year-on-year growth in both room occupancy (+2.2-percentage points), to 81.3-percent, and achieved average room rate (+1.7-percent), to $216.70, contributed to a 4.6-percent increase in RevPAR, enabling hotels in the USA to record a 2017 peak of $176.28.
In addition to the growth in RevPAR, hotels in the USA recorded increases in non-rooms revenues, including Food and Beverage (+11.2-percent) and Conference and Banqueting (+15.0-percent) on a per available room basis. As a result, year-on-year growth in TrevPAR increased by 6.7-percent, to $282.76.
The TrevPAR recorded this month was almost $30 above the year-to-date level, at $252.97 and also represented a peak for 2017.
Profit & Loss Key Performance Indicators – USA (in USD)
October 2017 v October 2016
RevPAR: +4.6% to $176.28
TrevPAR: +6.7% to $282.76
Payroll: + 1.2 pts to 31.5%
GOPPAR: +9.1% to $120.89
Despite cost increases, which included a 1.2-percentage point increase in Labour to 31.5-percent of total revenue, profit per room at hotels in the USA increased by 9.1-percent year-on-year to $120.89, equivalent to a profit conversion of 42.8-percent.
“The bumper profit performance in October provided hotels in the USA with some respite from the recent challenging period of operation, with data for the month suggesting that the strong performance was led by an increase in volume and price from the commercial segment.
The profit levels recorded this month were more than 25-percent above the performance so far in 2017, and have pushed the year-on-year GOPPAR figure into more positive territory, which will buoy hotel owners and operators in the region,” said Pablo Alonso, CEO of HotStats.
Hotels in Washington DC were amongst the best performing in the USA in October, recording a 16.5-percent year-on-year increase in profit per room to $192.60, equivalent to a staggering 49.3-percent profit conversion, and a 2017 high for hotels in the capital.
In line with the overall USA market, the growth was due to an uplift in activity in the commercial segment, which included a 7.1 per cent increase in the achieved rate in the residential conference segment, to $355.97, as well as a 6.7-percent increase in volume in the corporate segment, to 33.4% of all roomnights sold this month.
Profit & Loss Key Performance Indicators – Washington DC (in USD)
October 2017 v October 2016
RevPAR: +10.6% to $269.01
TrevPAR: +9.7% to $390.75
Payroll: +0.1 pts to 30.0%
GOPPAR: +16.5% to $192.60
The strong demand from the commercial segment this month enabled RevPAR levels at hotels in Washington DC to reach a 2017 high at $269.01, with increases recorded in both room occupancy (+4.4-percentage points), to 90.6-percent, and achieved average room rate (+5.2-percent), to $296.82.
“Amongst the business activity in Washington DC in October was the Annual Meeting of the Board of Governors of the World Back Group and the International Monetary Fund. This year, the high-profile meeting was attended by 4,000 member-country delegates, 650 observer organisation representatives, 900 members of the press and 550 accredited civil society members. Little wonder that hotels in the capital were able to record such premium performance levels this month,” added Pablo.
Over on the west coast, hotels in Portland were also among those to achieve strong profit growth this month, recording a 15.1-percent year-on-year increase in GOPPAR to $147.29.
Whilst hotels in Portland recorded a 4.2-percent increase in RevPAR, to $188.54, the growth this month was primarily through room occupancy, which increased by 4.4-percentage points, to 90.3 percent and offset the 0.9-percent decline in achieved average room rate to $208.71.
The uplift in volume fuelled the utilisation of ancillary facilities, enabling an increase in non-rooms revenues, including Food & Beverage (+50.5-percent) and Conference & Banqueting (+71.1-percent). This contributed to a year-on-year increase in non-rooms revenues of $36.26 per available room, which far outpaced the growth in pure rooms revenue, at just $7.62.
The significant contribution from all revenue departments meant that hotels in Portland recorded a 16.9-percent year-on-year increase in TrevPAR, to $303.67.
Profit & Loss Key Performance Indicators – Portland (in USD)
October 2017 v October 2016
RevPAR: +4.2% to $188.54
TrevPAR: +16.9% to $303.67
Payroll: +1.1 pts to 28.0%
GOPPAR: +15.1% to $147.29
The significant year-on-year increase in total revenue was not sufficient to offset the growth in Payroll levels at hotels in Portland, which increased by 1.1-percentage points, to 28.0-percent of total revenue.
Despite this increase, profit performance at hotels in Portland increased by 15.1-percent year-on-year to $147.29. However, the positive profit performance this month was not sufficient to offset the year-to-date decline and, at $111.78, GOPPAR at hotels in Portland remains 2.2-percent behind the same period last year for the ten months to October 2017.
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.
GOPPAR – Is the Total Gross Operating Profit for the period divided by the total available rooms during the period.
