April showers just may have been the thing hoteliers in the U.S. needed. Though May wasn't a full bouquet of flowers, green shoots certainly abounded.

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% YOY).

The uptrend is a sign that April may have been the bottom and absent a surge in cases, which is a possibility, the expectation is that month-over-month (MOM) 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, like these, 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, helped out in some way by Memorial Day Weekend travel, which, while much lower than the 43 million Americans who took a trip last year, according to AAA, was an added boost. May RevPAR of $13.76 (down 92.2% YOY) was up 54% from April and down 79% from RevPAR of $66.27 in March, the first month that COVID-19 impact showed up in hotel industry performance numbers.

Further and expected YOY 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% YOY, while utility costs were down 45% YOY. Anecdotally, the expectation is that water bills will rise due to increased laundry operations and additional and more frequent washing of things like linens due to cleaning protocols. One hotelier told HotStats that his water bill was already up 33%.

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.

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

Source: HotStats LimitedSource: HotStats Limited
Source: HotStats Limited

Minneapolis, like many cities across the U.S., was the scene of demonstrations and protests that followed the death of George Floyd at an officer's hands on May 25. The extent to which the event impacted travel is hard to decipher since it came amid the COVID-19 pandemic.

Hotel occupancy in the city was still depressed in the month, but up 2.3 percentage points on April and complemented by an $8 uptick in average rate. RevPAR was also slightly up but still down 95% YOY. The absence in room revenue and ancillary revenue weakened TRevPAR, which, while up 52% in May over April, is still down 95.3% YOY.

Expenses in May remained down on a YOY basis, including labor costs (down 80.1% YOY) and total overheads (down 67.5% YOY). The continued decrease in costs is still not close to enough to overcome what remains gargantuan losses in revenue and resulted in GOPPAR decreasing 118.6% YOY to $-11.60. Still, the negative dollar amount in May was 32.8% better than April's GOPPAR of $-17.26.

Profit & Loss Performance Indicators — Minneapolis (in USD)

Source: HotStats LimitedSource: HotStats Limited
Source: HotStats Limited

Houston had a strong May story, illustrated by a 90% MOM increase in TRevPAR and a 60.2% MOM increase in GOPPAR, which at $-8.10 is inching closer to the break-even point. However, as COVID cases make a strong resurgence in Texas, including an all-time daily high of 5,489 on June 23 that prompted Governor Greg Abbott to tighten restrictions, the small shoots of growth could be temporary.

Profit & Loss Performance Indicators — Houston (in USD)

Source: HotStats LimitedSource: HotStats Limited
Source: HotStats Limited

About HotStats

HotStats provides monthly P&L benchmarking and market insight for the global hotel industry, collecting monthly detailed financial data from more than 8,500 hotels worldwide and over 100 different brands and independent hotels. HotStats provides more than 550 different KPIs covering all operating revenues, payroll, expenses, cost of sales and departmental and total hotel profitability.

Kathryn Potter
HotStats Limited