The hotel industry is rebounding, but expense creep, especially labor-related costs, and still trailing business travel, are having a bigger impact on bottom line results, according to an analysis of May global data from HotStats.
In the U.S., RevPAR in May was up 539% versus the previous year but still 51% lower than May 2019. Total revenue in May 2021 increased to US$127 per available room, a 541% increase over last year.
However, labor costs are up nearly US$20 per available room since last May, a cost that is unlikely to subside considering the tight labor market in the U.S. It will be interesting to see how this cost evolves once unemployment incentives run out.
Gross operating performance per available room was US$40.55 in May, a 319% increase over 2020, but 63% lower than May 2019.
Different story in Europe
Europe’s ongoing COVID-related restrictions are muting a hotel rebound. In May, HotStats reports hotel TRevPAR was only US$49.83, which translated to an almost break-even GOPPAR of €2.52. It did mark the first month of positive profit for the region since September 2020.
Total labor costs in the month hit €23.76, which were 46.8% higher than at the same time a year ago, and only €6 less than total rooms RevPAR.
Asia Pac steady
Strong domestic demand is driving the recovery In Asia Pacific, according to HotStats.
RevPAR in May 2021 hit US$59.07, which was 141% higher than the previous year. It was helped by 50% occupancy and US$118 ADR. TRevPAR of US$106.39 was driven by F&B, which had US$40.77 RevPAR, a 152% increase over the previous year.
Overhead costs, again, dug into profits, reaching US$30.26 per available room and up 44.9% over May 2020, yet US$12 lower than May 2019. GOPPAR in May 2021 was US$27.55, a resounding 1,040% higher than May 2020, but still less than half of May 2019.
Middle East rebound
Higher rates and rising occupancy are driving a Middle East rebound. RevPAR in May was US$76.57, a 222% increase over the prior year, while TRevPAR of US$120.88 was a 228% increase over the same time a year ago.
Further good news: labor costs remain steady, just shy of US$40 per available room. GOPPAR hit US$37.29 in the month, 430% higher than at the same time a year ago. The Middle East has now had 10 consecutive months of positive profit performance.