FOR MONTHS, HOTEL industry experts have tried to predict when profits would return to 2019 levels. In March, U.S. hotels reached the halfway point, according to STR.
Gross operating profits during the month reached 50 percent of the comparable 2019 level, according to STR‘s March 2021 monthly P&L data release. GOPPAR, TRevPAR and EBITDA PAR were higher than any month since February 2020 at $26.79, $86.61 and $12.77.
Amid hiring difficulties, total labor costs, at $27.66, were 60 percent of last March’s total.
“We have seen continued improvement in room revenue, but with little coming in from F&B and other departments, industry TrevPAR is not gaining as much steam,” said Raquel Ortiz, STR’s assistant director of financial performance. “At the same time, however, the lack of F&B expenses is allowing profit margins to grow closer to normal. Though other revenues are up compared with recent months, we don’t expect to see a significant boost in those numbers until group demand resurfaces.”
In its P&L report last week, HotStats also found that profits for U.S. hotels showed moderate gains in March. Ortiz said the recovery shows signs of strengthening.
“Fortunately, not all hotels are struggling. Hotels with enough demand to achieve occupancy levels above 50 percent have been able to turn a profit. This is especially true for the limited-service segment, where 68 percent of hotels have remained profitable,” she said. “These margins are of course at reduced operations in a lot of cases, so some full-service hotels are operating more like limited-service with far less F&B offerings, and some limited-service hotels are operating like extended-stay properties with less daily room cleanings. Overall, profitability is recovering at a slightly quicker pace than anticipated, although the industry has a long way to go.”
Earlier this week, a bi-annual survey from the Hospitality Asset Managers Association found that half of HAMA members believe RevPAR will return to 2019 levels by 2023 and around 10 percent believe it will occur as early as 2022. However, approximately 37 percent believed it would happen in 2024. Predictions for 2025 and 2026 came in at three and one percent, respectively.