Industry Update
Press Release 9 January 2019

U.S. Hotels Suffer Profit Plunge in November

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TRI Hospitality Consulting

Hotels in the U.S. did not have much to be thankful for in November, posting a 5.2-percent year-on-year drop in profit per room, the single biggest margin of decline so far in 2018, according to the latest data tracking full-service hotels from HotStats.


November was only the third month in 2018 that hotels in the U.S. recorded a drop in profit following a year-on-year decline in both January (down 0.5 percent) and July (down 2.2 percent).

Profit per room dropped to $84.26 for the month, a full one-third decline off the $126.34 GOPPAR recorded in October.

Profit levels were hit by increasing costs, which included a 1.4-percentage-point uptick in labor costs to 37.1 percent of total revenue, as well as a 0.7-percentage-point increase in overheads, which grew to 23.8 percent of total revenue.

As a result, profit conversion came in at 33.9 percent of total revenue, well off the year-to-date figure of 38.2 percent.

In concert with profit declines were modest revenue setbacks across departments including Rooms (down 0.7 percent), Food & Beverage (down 1.9 percent) and Conference & Banqueting (down 3.9 percent), on a per-available-room basis.

TRevPAR remained relatively unmoved, recording a decline of 0.3 percent year-on-year to $248.29, and was 5.1 percent below the year-to-date figure of $261.55.

Profit & Loss Key Performance Indicators - U.S. (in USD)

  • November 2018 v. November 2017
  • RevPAR: -0.7% to $150.58
  • TRevPAR: -0.3% to $248.29
  • Payroll: +1.4 pts. to 37.1%
  • GOPPAR: -5.2% to $84.26

On a lighter note, hotels continued an upward trend in achieved average room rate, which has now grown by 5.7 percent over the last 24 months, on a rolling 12-month basis, to $208.29. As ARR has risen, room occupancy has been flat to down over the last 24 months.

For November, occupancy fell by 1.4-percentage points to 73.6 percent, which was the second-lowest occupancy of the year, ahead of only January.

"While November isn't historically as strong as September or October, it is normally a pretty positive month for hotels in the U.S.; however, softening toward the end of the year will no doubt recenter the conversation on cost creep, principally in labor expense," said David Eisen, Director of Hotel Intelligence & Customer Solutions at HotStats.

In line with the decline across the U.S., hotels in Seattle recorded a drop in profit per room in November, falling 9.8 percent YOY to $71.89.

This was the third month of decline in profit per room in 2018 for the city, following a larger drop in February of 11.1 percent. More worrisome, it is the second consecutive month of profit decline, following a 5.1-percent drop in October.

Profit pressure is partly a result of considerable additions to hotel supply in the city, which has primarily impacted top-line performance, illustrated by a 4.5-percent drop in RevPAR in November to $142.21—a combination of room occupancy down 2.6 percentage points, to 79.3 percent, and achieved average room rate down 1.4 percent to $179.38.

Further departmental declines were in Food & Beverage (down 5.3 percent) and Conference & Banqueting (down 4.5 percent).

Profit & Loss Key Performance Indicators - Seattle (in USD)

  • November 2018 v. November 2017
  • RevPAR: -4.5% to $142.21
  • TRevPAR: -3.6% to $203.67
  • Payroll: +2.7 pts. to 36.8%
  • GOPPAR: -9.8% to $71.89

As a result of the movement across all revenue departments, TRevPAR at hotels in Seattle fell by 3.6 percent this month to $203.67, which was 20.5 percent behind the year-to-date figure of $255.99.

Profit performance was further affected by an uptick in labor costs, which increased to 36.8 percent of total revenue. As a result, profit conversion at hotels in Seattle was recorded at 35.3 percent of total revenue.

"The Seattle hotel market has added 2,550 rooms since January 2017, highlighted by the recent opening of the 1,260-room Hyatt Regency Seattle, the largest hotel in the Pacific Northwest," said Eisen. "The city's hoteliers now face a challenging period of operation, which will be further exacerbated by properties in the planning or development phases across King, Snohomish and Pierce counties."

PacNW neighbor Portland is also a market suffering from growing pains, as supply increases continue to impact top- and bottom-line performance levels.

In November, profit per room at hotels in Oregon's largest city fell by 12.2 percent, which is a fifth month of profit decline in 2018 and a second consecutive month of GOPPAR decline, following the 12.6-percent drop in October. (YTD November, GOPPAR is up 0.6 percent in the city.)

Rising costs, which included a 1.2-percentage-point increase in labor to 36.3 percent, contributed to profit per room being recorded at just $78.79 this month, 29 percent off the year-to-date figure of $110.55.

Profit & Loss Key Performance Indicators - Portland (in USD)

  • November 2018 v. November 2017
  • RevPAR: -6.8% to $141.45
  • TRevPAR: -4.4% to $228.31
  • Payroll: +1.3 pts. to 36.3%
  • GOPPAR: -12.2% to $78.79

About HotStats

HotStats provides a unique profit-and-loss benchmarking service to hoteliers from across the globe that enables monthly comparison of hotels' performance against competitors. It is distinguished by the fact that it maintains in excess of 500 key performance metrics covering 70 areas of hotel revenue, cost, profit and statistics, providing far deeper insight into the hotel operation than any other tool. The HotStats database totals millions of hotel rooms worldwide. For more information, visit

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