Month-over-month performance begins to stabilize

Through the global hospitality industry is still in critical condition, it appears to be coming off life support and moving to intensive care, given the extraordinary circumstances foisted by COVID-19, according to data from HotStats. As of May, and on a month-over-month basis, performance is either stabilizing or picking up. April, fingers crossed, was the bottom.

U.S. eases into reopen

In the U.S., between April and May, total revenue per available room (TRevPAR) was up 39% (down 92% year-over-year) and gross operating profit per available room (GOPPAR) was up 32% to $-17.25 (down 116.2% year-over-year).

Absent a surge in coronavirus cases, which is a possibility, the expectation is that month-over-month numbers will continue to improve, especially as more states move into Phase Two, which allows for non-essential travel to commence and sets out certain guidelines should hotels decide to reopen.

Occupancy and room rate in May remained well off 2019 levels, but did climb 4 percentage points and 5%, respectively, from April. May RevPAR of US$13.76 (down 92.2% year-over-year) was up 54% from April and down 79% from RevPAR of US$66.27 in March, the first month that COVID-19 impact showed up in hotel industry performance numbers.

Further and expected year-over-year expense drops showed up in the data, as many hotels remained closed or operated at limited capacity. Labor costs on a per-available-room basis were down 74.4% year-over-year, while utility costs were down 45% year-over-year.

Profit margin was -87.3% of total revenue, up 93 percentage points from April, but down 125 percentage points from the same time a year ago.

Europe bottoms out

Europe passed the peak of coronavirus infections in early May, according to the European Centre for Disease Prevention and Control (ECDC). As several countries started to loosen some lockdown restrictions, profit-per-available-room declines showed a significant deceleration on a month-over-month basis. GOPPAR in May was down 1.2% compared with April and even though GOPPAR remains 125.5% below May 2019, this reduction is an indicator that the region hit its bottom.

Occupancy recorded an uptick of 1.3 percentage points month-over-month to 7.3%, which resulted in a 17.9% month-over-month increase in RevPAR. These results are still far from the numbers recorded in May of the previous year, but they are the first signs of recovery in the region. The closure of most ancillary revenue streams fueled the 5.4% month-over-month decline in TRevPAR, which equals a 94.2% year-over-year slump.

Labor costs accompanied the hike in occupancy, recording a 1.2% month-over-month expansion, while overhead costs were cut by 0.9% month-over-month. Profit conversion in May was recorded at -166.1% of total revenue, down 11.1 percentage points from April and off from 37.8% in the same month of the previous year.

Asia-Pacific upturn

Like other regions, Asia-Pacific appears to have bottomed out and is now clawing its way back little by little. May results show the first month-over-month upticks for both top-line and bottom-line metrics since December 2019. GOPPAR for the region took a 78.2% MOM jump, and at -$3.04 is making strides toward breaking-even after turning negative in March.

Occupancy almost reached 30% in May, and at 26.6% was a 7.4-percentage-point increase compared to April. And even though this is still 43.6 percentage points below May 2019 numbers, it’s the first time since February that occupancy has placed above 25% in the region. This rise in volume drove the 39.5% month-over-month surge in RevPAR. Further contributing to the top-line, F&B revenue per available room was up by 89.8% month-over-month, resulting in a much needed 48.1% month-over-month expansion of TRevPAR.

Despite top-line growth, hoteliers in APAC were able to avoid cost creep and managed to reduce labor costs and overheads by 6.7% and 1.3%, respectively, on a month-over-month basis. As a result, profit conversion in May was recorded at -7.5% of total revenue, placing 43.4 percentage points above the previous month.

Middle East momentum

May saw month-over-month jumps for the Middle East in both total revenue and profitability. RevPAR in the region dropped off precipitously after February, and in May it hit $23.03, which, though 78.4% down from the same time a year ago, was up 5.9% over April, underpinned by a 5-percentage-point uptick in occupancy. Though occupancy was up in the month, average rate decreased 14.5% in May over April, a sign that hoteliers in the region are resigned to sacrifice rate in order to build back occupancy.  

TRevPAR grew 10.5% in the month over the month prior, bolstered by F&B revenue, which saw a 25% month-over-month increase.  

Expenses continued to fall, including labor and total overheads, down 50.6% and 50.5% year-over-year, respectively. Meanwhile, on a month-over-month basis, labor and overheads costs were relatively static, a sign of an industry balancing out amid a slow return to normalcy.

After breaking even in March, GOPPAR fell into negative territory in months thereafter. While May remained negative in dollar amount, it was 20% better than April. It’s still down 120.8% year-over-year.

News that Saudi Arabia will only allow around 1,000 pilgrims residing in the kingdom to perform the Hajj in July will be a huge blow to the Middle East’s overall numbers. Some 2.5 million pilgrims from around the world visit the cities of Mecca and Medina annually for the week-long ritual scheduled to begin in late July.

Profit margin was up 13 percentage points in May over April to -34.8% of total revenue.