Results from the 2015 edition of Trends® in the Hotel Industry,an annual report recently released by PKF Hospitality Research (PKF-HR), a CBRE Company, reveal that U.S. hotels (on a unit-level same-store sales basis) achieved a 12.3 percent increase in net operating income (NOI) during 2014. This marks the fourth consecutive year of profit growth in excess of 10 percent, a trend that is forecast to continue through 2016. This six-year period (2011-2016) of continuous double-digit gains on the bottom line will be the longest such streak for the nation’s hotels since PKF began tracking the industry in 1937.
“In 2014, the average hotel in our Trends® sample achieved a bottom-line profit of $17,849 per available room. This is nominally greater than their 2007 pre-recession peaks, but perhaps of greater importance is that hotel profits, in inflation-adjusted terms, will exceed 2007 levels in 2015,” said R. Mark Woodworth, senior managing director of PKF-HR.
The strong increase in unit-level profits was not unexpected. A year ago, PKF-HR forecast a 12.4 percent increase in NOI for 2014. PKF-HR is projecting NOI increases of 13.4 percent in 2015 and another 12.2 percent in 2016.
This year’s Trends® in the Hotel Industry is the 79th annual compendium of hotel operating statistics. The results are based on a sample of operating statements from approximately 7,000 properties in the U.S. that voluntarily participated in the survey.
Over three quarters of the hotels in the Trends® survey (78.2 percent) reported an increase in profits during 2014. “For a couple of years we have been touting the breadth of the top-line recovery across the entire industry. Now we are seeing that on the bottom line as well,” said Woodworth. “Five of the six property types in our survey achieved double-digit profits growth during 2014. The lone exception was convention hotels which still achieved a very strong 9.2 increase in NOI.”
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