The global pandemic is showing signs of abating, and the hotel industry is seeing the rewards as more travelers travel to escape the monotony of work from home and Netflix overload.
Although the hotel industry is pleased to have them back, a continuing revenue shortfall, caused by some segments such as corporate and group, expense creep, and a difficult labor market are having a negative impact on the bottom line.
The U.S. Push
Here's a statistic: According to the TSA on June 25, 2021 2,137,584 people travelled through U.S. airspaces. This was 78% more than the June 25, 2019 total and 237% more that the June 25, 2020 total. People are moving again which means that they are staying in hotels again.
The U.S., where many states or municipalities continue to relax COVID protocols. Revenue continued its march forward in may, with RevPAR increasing 539% over the previous year, but still 51% less than May 2019. Revenue from rooms rose 541% over the previous year, thanks to the increased revenue from the leisure segment. Total revenue reached $127 per room, an increase of 51%.
The labor costs for each available room have increased by nearly $20 since May. This should continue to rise as hoteliers realize that they must spend more to attract employees who are either hesitant to return to hospitality or have changed careers.
The gross operating performance per room reached $40.55 in May. This is a 39% increase over May 2018, but 63% less than May 2019.
Europe is Still stuck
Europe's hotels are behind other regions because many countries still have regulations that prevent travel from returning. The May TRevPAR for hotels was only $49.83. This resulted in a nearly break-even GOPPAR (2.52) which was the first month of positive profits for the region since September 2020.
The total labor costs for the month were 23.76. This was 46.8% more than a year ago and just 6 less than total rooms RevPAR.
Steady Rise in APAC
Strong domestic travel in Asia-Pacific is having a significant impact on hotel performance. RevPAR for the month was $59.07, which is 141% more than the same period a year ago. The month saw a nearly 50% occupancy rate, and a rising ADR of $118. TRevPAR was $106.39 due to an increase in ancillary revenues. F&B RevPAR reached $40.77 in May, which is 152% more than the same month a year ago.
Overhead costs were a key component of revenue. They were $30.26 per room available, an increase of 44.9% compared to May 2019 and $12 lower than May 2019. The GOPPAR for the month was $27.55, which is 1,040% more than May 2020 but still less that May 2019.
Middle East makes a mark
The Middle East, like APAC is experiencing a nice rebound due to rising occupancy and higher rates. RevPAR for the month was $76.57. This is a 222% increase on the previous year. TRevPAR was $120.88, which is 228% more than the year before.
While labor costs are steady at just under $40 per room, GOPPAR reached $37.29 for the month. This is 430% more than the same period a year ago. Now, the Middle East has had ten consecutive months of positive profit performance.