USA, Washington, D.C. July 26, 2018

An +8.5 percent year-on-year increase in profit per room in June contributed to the +4.2 percent increase for H1 2018 at U.S. hotels, which was due to an increase in revenue as well as a reduction in costs, according to the latest worldwide poll of full-service hotels from HotStats.

Profit per room at hotels in the U.S. soared to $111.18 this month, from $102.46 during the same period in 2017. This was the fifth consecutive month of profit growth at hotels in the U.S. and the year-on-year increase in GOPPAR was second only to in April when profit increased by 9.1 percent.

The 4.2 percent increase in TrevPAR this month was driven by growth across all revenue centers, including rooms (+4.1 percent), food/beverage (+2.7 percent), and conference/banqueting (+2.3 percent) on a per available room basis.

Rooms revenue this month was fueled by a 0.7 percentage point increase in room occupancy to a punchy 83.3 percent, as well as a 3.2 percent increase in achieved average room rate, which hit $210.45.

While the growth in rate this month was driven by the commercial segment and included an increase in rate in the residential conference (+3.9 percent) and corporate (+0.1 percent) sectors, year-on-year growth was also recorded in the leisure segment at +2.2 percent, which increased to $202.73.

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

June 2018 v June 2017

RevPAR: +4.1% to $175.26

TrevPAR: +4.2% to $274.33

Payroll: -0.7 pts to 33.0%

GOPPAR: +8.5% to $111.18

In addition to the growth in top line performance, U.S. hotels successfully recorded a drop in labor costs for only the second time in 2018, which fell by -0.7 percentage points to 33 percent of total revenue.

Furthermore, hotels recorded a 0.8 percentage point drop in overheads to 21.7 percent of total revenue, which helped to drive the increase in profit per room.

Due in part to the strong year-on-year increase this month, profit conversion at hotels in the U.S. was recorded at 40.5 percent of total revenue, which is well above the average in the rolling 12 months to June 2018, at 37.7 percent of total revenue.

Furthermore, flow through at hotels in June was recorded at a very robust 78.5 percent, which reflects the strong growth in revenue and cost savings.

"The Federal Reserve raised its outlook for economic growth in the U.S. in 2018 during the month of June to +2.8 percent from +2.7 percent, as economic activity has been rising at a "solid" rate this year.

This has been reflected in the performance of hotels, which have had an excellent period of trading in H1 2018, with the market seemingly going from strength to strength. Hotel owners and operators will be keen to see such growth continue for the remainder of the year and beyond," said Pablo Alonso, CEO of HotStats.

One of the top performing markets in the U.S. in June was Houston, where profit per room soared by 49.8 percent year-on-year to $60.62.

This is the strongest month of year-on-year growth so far in 2018 and represents a significant recovery from the challenging period of trading almost 12 months ago when the city suffered the effects of severe flooding.

In addition to a series of small conferences, June was notable for the elevated demand levels associated with the 10 days of celebration to mark the 40th anniversary of Pride Houston, which helped drive a +10 percentage point increase in room occupancy at hotels in the city to 74.5 percent, as well as a +5.5 percent increase in achieved average room rate to $144.53.

In addition to the +21.8 percent year-on-year growth in rooms revenue, the uplift in demand helped drive an increase in non-rooms revenues at Houston hotels in June, including food/beverage (+17 percent) and conference/banqueting (+23.7 percent), which helped deliver a 20.3 percent increase in TrevPAR to $155.27.

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

June 2018 v June 2017

RevPAR: +21.8% to $107.65

TrevPAR: +20.3% to $155.27

Payroll: -4.9 pts to 30.8%

GOPPAR: +49.8% to $60.62

In addition to the strong revenue performance this month, hotels in Houston were able to cut costs to help boost profit levels, which included a -4.9 percentage point saving in labor costs to 30.8 percent of total revenue.

As a result of the movement in revenue and costs, profit conversion at hotels was recorded at 39 percent of total revenue. Furthermore, GOPPAR levels have recovered somewhat from the crash in August 2017, to $68.94 on a rolling 12-month basis,

"Pride is a key event in the Houston calendar, with an attendance of more than 700,000 every year. With the event celebrating its 40th anniversary, the attendance this year was even stronger, which is reflected in the very punchy performance of hotels in the city.

However, the oil and gas industry, upon which the city is so reliant, continues to face challenges and the city will face further tests with the addition of more than +1,000 rooms to hotel stock in 2018," added Alonso.

Elsewhere in Texas, hotels in Dallas also were able to record a +2.4 percent increase in RevPAR to $110.21, as a result of increases in both volume and price.

However, tumbling non-rooms revenues, which included a -12.8 percent decline in food/beverage revenue canceled out the increase in RevPAR and led to a -1.3 percent drop in TrevPAR, to $162.17.

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

June 2018 v June 2017

RevPAR: +2.4% to $110.21

TrevPAR: -1.3% to $162.17

Payroll: -0.3 pts to 32.0%

GOPPAR: -4.3% to $58.03

While hotels in Dallas were able to record a 0.3 percentage point saving in labor costs to 32 percent of total revenue, it was not sufficient to offset the drop in revenue. And as a result, profit per room at hotels fell by -4.3 percent to $58.03.

This was the lowest GOPPAR level recorded at hotels in Dallas so far in 2018 and equivalent to a profit conversion of 35.8 percent of total revenue.

Editor's Notes: The hotels profiled in this report are drawn from the HotStats database and reflect the portfolios and distribution of the hotel chains that we survey and which operate in the full-service sector. Please note: The data samples are reviewed and rebased each year to reflect the changes in the HotStats survey base. As a result, performance ratios published last year may differ from those contained within this report.

Glossary:

Occupancy (%) - Is that proportion of the bedrooms available during the period which are occupied during the period.

Average Room Rate (ARR) - Is the total bedroom revenue for the period divided by the total bedrooms occupied during the period.

Room Revpar (RevPAR) - Is the total bedroom revenue for the period divided by the total available rooms during the period.

Total Revpar (TRevPAR) - Is the combined total of all revenues divided by the total available rooms during the period.

Payroll % - Is the payroll for all hotels in the sample as a percentage of total revenue.

GOP PAR - Is the Total Gross Operating Profit for the period divided by the total available rooms during the period.