U.S. HOTELS IN November saw profits plummet as COVID-19 cases surged, according to reports from STR and HotStats. The forecast is that, until the newly released vaccines against the disease have been widely distributed, recovery will be postponed.
GOPPAR for the month dropped 97.5 percent from November 2019 to $2.13, according to STR. That’s the lowest since June when it was $5.89.
TRevPAR dropped 73.5 percent year-over-year to $60.92 and EBITDA PAR dropped 120.2 percent to negative $12.30. At the same time, labor costs were down 61.4 percent from last year to $31.32.
“Profitability data fell in line with the November performance metrics we released earlier this month, as U.S. demand and occupancy fell to their lowest levels since May ahead of the Thanksgiving holiday,” said Raquel Ortiz, STR’s assistant director of financial performance. “As a result, labor costs were cut roughly 48 percent to adjust to reduced demand levels.”
The decline reversed minor gains in previous months, including October, the reports said.
“With GOPPAR down 83 percent and EBITDA down more than 100 percent through the first 11 months of the year, we can expect nearly zero profit for 2020 in total. Seven of the major markets remain unprofitable at a GOP level, where we typically see 35 to 45 percent margins,” Ortiz said. “New York and Chicago have consistently shown an oversized impact on profits compared with other markets, likely due to higher labor and fixed costs. Additionally, full-service GOPPAR in the top markets has dropped from 100 dollars in 2019 to just 12 dollars thus far in 2020.”
HotStats’ data for November showed similar results as the COVID-19 surge and subsequent restrictions dampened performance in the U.S. and European markets. It showed GOPPAR for the U.S. down 103.4 percent from the previous year to negative $3.05 and a 93.3 percent to $6.67 for the year-to-date. TRevPAR for the month was down 79.2 percent to $54.07 year-over-year and down 67.7 percent for the year to date to $86.93. RevPAR dropped 78.4 percent from the 2019 level to $34.75 and was down 67.9 percent to $54.97 for the year so far.
“Occupancy was down 4 percentage points over October to 24.2 percent and coupled with an average rate at $143.74 produced RevPAR of $34.76, which was down more than 78 percent year-over-year and 15 percent over the month prior. October is historically a stronger month for U.S. hotel performance than November,” HotStats reports.
Also, F&B revenue per-available-room remained below $10, a nearly 90 percent decrease from the same time in 2019, according to HotStats. It is expected that new pandemic restrictions in large cities such as New York, Washington, D.C., Philadelphia as well as areas across California will worsen those numbers. The fact that carry-out and delivery food options are thriving is not expected to help hotels.
“Hotel restaurants are typically positioned different than regular, stand-alone restaurants and do not capture as much takeout and delivery revenue,” the report said. “If not for cost control, hoteliers would be in an even more precarious position. Labor costs remained around the $30 level on a per-available-room basis, 68.5 percent less than at the same time a year ago. Overhead costs jumped $6 in November over October, but still down more than 55 percent year-over-year. Profit margin clocked in at -5.7 percent, illustrating how much revenue has been lost and despite cost savings.”